The Dodd-Frank Wall Street Reform Act is less than perfect, said Sheila Bair on Thursday at the TD Ameritrade Institutional 2012 conference, but the nation is “still better off for it.”
The former chairman of the FDIC (left) received warm applause from advisors when one advisor complimented her for her role during the financial crisis. “You built trust instead of destroying it,” the advisor said, prompting the applause from many of the 1,300 or so advisors attending the conference, but then asked a pointed question about one of the weaknesses of Dodd-Frank. “Derivatives were off the balance sheet” at the big banks, he pointed out, then asked, “Does Dodd-Frank regulate that?”
Bair responded, “No,” and said she “worries a lot about that,” even though she said the SEC is “improving disclosure on the gross exposure” of the big banks. “I wished we had done more” on that issue in Dodd-Frank. “It’s a safety and soundness issue” for the banks, she argued. Over all, she said, it’s still “important for regulators to ‘calibrate’ Dodd-Frank regulations,” and that several data-gathering requirements of Dodd-Frank will help forestall another crisis, and even over-regulation. “The problem with not having enough information is that you tend to do too much” as a regulator, rather than too little.
As for any changes to Dodd-Frank, she expressed a fervent desire that Congress not change Dodd-Frank’s provisions allowing regulators to resolve banks formerly seen as “too big to fail,” and encouraged advisors worried about a recurrence of the big bank bailouts to look at the “very granular” documents on the fdic.gov website showing that the FDIC has “a way to resolve these big banks.”