“The 20th century regulatory structure has been outpaced by the 21st century innovations in the financial services industry, and if we don’t fix it, we could be right back where we were a year ago”
Today, at a hearing to continue oversight of the Emergency Economic Stabilization Act one year after its enactment, Senate Banking Committee chairman Chris Dodd (D-CT) warned that reforms are needed to ensure the regulatory failures that brought our economy to the brink of collapse are not repeated.
“Are any of us glad that we had to spend this money? Absolutely not, it was a tragic time for our country. I share the anger and frustration that many of our colleagues and our fellow citizens felt at the time and still do in many quarters that Wall Street greed and regulatory neglect left taxpayers on the hook. All of us, I think share in those emotions,” said Dodd.
“I am relieved that we have managed to bring our economy back from the brink – we are not talking about a depression any longer or a complete meltdown of the financial services sector.”
“And I am more committed than ever to taking action so that the American taxpayers who funded this effort aren’t asked to clean up another mess they didn’t make in the future on related matters. We need to take action to restore Americans’ confidence, their sense of optimism – and their financial security – by reforming a regulatory system that still contains far too many gaps, loopholes, and redundancies.”
“The 20th century regulatory structure has been outpaced by the 21st century innovations in the financial services industry, and if we don’t fix it, we could be right back where we were a year ago, facing a another dreadful choice between a massive outlay of taxpayer dollars or an unimaginable economic disaster for our nation and others around the globe.”
Testimony and webcast will be available after the hearing at:
http://banking.senate.gov/public/index.cfm?FuseAction=Hearings.Hearing&Hearing_ID=ff78e881-372e-41e3-915d-e4d5a93da22d
A complete list of hearings held this year can be found at:
http://banking.senate.gov/public/index.cfm?FuseAction=Hearings.List&Month=0&Year=2009
Below is the statement as prepared for delivery:
“A little over a year ago, Treasury Secretary Henry Paulson, Federal Reserve Chairman Ben Bernanke, and SEC Chairman Chris Cox came to Congress with an urgent message: The American economy was on the brink of total collapse and they needed $700 billion of taxpayer money to stop it.”
“Already, our nation, as all of us here know, was in the midst of an economic crisis that threatened small businesses’ ability to make payroll, cost us thousands and thousands of jobs, turned the American Dream of homeownership into a nightmare for many, kept students from getting college loans, and wiped out hundreds of billions of dollars in savings that Americans were counting on for their retirement.”
“With financial giants toppling what seemed like every day, and with businesses large and small suddenly unable to access the credit they needed to operate, we clearly needed to act.”
“But when the Bush administration’s proposal emerged, it was clearly unacceptable. I know particularly Judd, myself, Bob Corker and others were involved in those days and it was a wild two weeks looking back a year ago.”
“As my colleagues may recall, the original proposal asked Congress for a blank check, with no protections for the taxpayers on whose account it was being drawn. Their proposal included no congressional oversight – they even wanted to prohibit judicial and administrative review of the Secretary’s decisions.”
“In short, the Bush administration asked Congress to put up an unprecedented amount of taxpayer money and executive power under the unchecked control of one unelected individual, with no guidelines to ensure that it would be used properly – without even so much as an office with a dedicated staff to keep track of where it was going.”
“Doing nothing obviously was not an option – but neither was the proposal they submitted.”
“The crisis demanded that we bring together members of the House and Senate, Republicans and Democrats, and hammer out a better solution, and that is what happened over the ensuing several weeks.”
“We fought hard to include taxpayer protections and meaningful oversight.”
“We fought to ensure that if ordinary Americans who had done nothing wrong were going to pay for this stabilization effort, they would get to share in the benefits if companies became more profitable – an initiative driven by Senator Jack Reed of our committee.”
“We required Treasury to put homeowners and the financial security of American families at the top of the agenda.”
“We established the three oversight bodies that are before us today to keep an eye on what was happening over the ensuing weeks and months.”
“And we made certain that we put first and foremost the principle that with this assistance to the financial sector would come real change so that a crisis like this wouldn’t happen again.”
“Are any of us glad that we had to spend this money? Absolutely not, it was a tragic time for our country.”
“I share the anger and frustration that many of our colleagues and our fellow citizens felt at the time and still do in many quarters that Wall Street greed and regulatory neglect left taxpayers on the hook? All of us, I think share in those emotions.”
“But I am also proud of the hard work we did a year ago, it wasn’t easy given the time constraints we were given. People stepped up and we did the best we could under the circumstances. Certainly it was far from perfect, we all know that today looking back. But with the time we were given, the circumstances we were confronted with, I think we did the right thing and I think that history will prove that to be the case.”
“I am relieved that we have managed to bring our economy back from the brink, we are not talking about a depression any longer or a complete meltdown of the financial services sector.”
“And I am more committed than ever to taking action so that the American taxpayers who funded this effort aren’t asked to clean up another mess they didn’t make in the future on related matters.”
“We need to take action to restore Americans’ confidence, their sense of optimism – and their financial security – by reforming a regulatory system that still contains far too many gaps, loopholes, and redundancies.”
“The 20th century regulatory structure has been outpaced by the 21st century innovations in the financial services industry, and if we don’t fix it, we could be right back where we were a year ago, facing a another dreadful choice between a massive outlay of taxpayer dollars or an unimaginable economic disaster for our nation and others around the globe.”
“I look forward to working with my colleagues. Senator Shelby and I are good friends and we’ve worked hard together on numerous issues. I have mentioned already a number of members of this committee. And I welcome you Judd, to this effort because of your background and experience as we try to navigate these waters in the coming weeks and months to try to respond to the challenge before us.”
