Chris Dodd: Financial Reform Bill Would Stop Goldman-Style "Shenanigans"

Chris Dodd

Democrats in the Senate will move forward this week with their financial regulation bill, Senate Banking Committee Chair Chris Dodd (D-Conn.) said today, even though Republicans still stand united against the legislation.

Republicans have charged that the bill "allows for endless taxpayer bailouts of Wall Street," but Dodd said just the opposite is true. He added that such legislation would stop the kind of activity that investment bank Goldman Sachs was recently charged with -- defrauding investors.

"Let there be no doubt in my mind, our bill would have prevented that kind of events from happening, in my view, and that's what the public needs to know," Dodd told reporters today. "By not enacting our legislation, by filibustering it, stopping it, we leave the American public vulnerable once again to the kind of shenanigans that have occurred in our large financial institutions across this country."

Democrats intend to move the bill forward this week, he said.

"We've had a lot of the conversations, there's still room for some more, but the talking is almost over and now we need to move and make decisions about whether or not we're going to support this legislation," the senator said.

He added that Democrats should be able to get the votes to open debate on the bill and consider amendments, since in a letter stating their opposition last week, Republicans made no mention of filibustering the bill.

"In light of the events of the last week or so... I don't really believe Republicans want to be in a position where they are talking about filibustering this bill," Dodd said.

The GOP's contention that the reforms amount to a "bailout bill" is focused on a provision in the legislation that would create a $50 billion bank liquidation fund. Large financial institutions -- not taxpayers -- would be responsible for providing the $50 billion, which the Federal Deposit Insurance Corp. would use to pay for dismantling giant failing firms.

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When a financial institution fails, "instead of having an implicit guarantee you get bailed out, our legislation says: No, that's over with, forever," Dodd said. The new fund, he said, would be used "to unwind those institutions intelligently and smartly, so it doesn't have an effect on other solvent institutions."

The Obama administration has urged Senate Democrats to drop the fund because it is unnecessary, but Democrats said today they are still waiting for a Republican alternative.

"If there were other ways to do this, we'd listen," Sen. Mark Warner (D-Va.) told reporters. "'We need to hear specific suggestions, not broadbased partisan attacks."

President Obama will travel to New York on Thursday to sell the reforms to the American public. Democrats have cast the issue as a choice for lawmakers between siding with American people or siding with big banks.