Senator Chris Dodd (D-CT) is in a fight for his political life. Dodd continues to trail his primary Republican opponent Rob Simmons in recent polls. More disturbing than the actual polls versus his competition is the fact that fully 51% of those polled do not consider Dodd honest and trustworthy.
What happens to individuals faced with a potential death sentence? Come to Jesus. Faced with the prospect of death, literally or professionally, individuals often will undertake drastic changes in appearance and demeanor in an attempt to stave off that deep, dark descent. In that light, I am never amazed by actions, statements, and positions put forth by politicians.
What is Chris Dodd’s epiphany? Dodd clearly smells the wrath of the American populace toward Washington and Wall Street. Few politicians have been more closely linked with these two worlds than Senator Chris Dodd. After a year’s worth of debate and discussion on financial regulatory reform, Dodd is now proposing the most sweeping and all encompassing overhaul across the entire financial industry. Is this a Hail Mary pass in an attempt to pull victory from the jaws of political defeat? The American Banker provides a wide angled view of Dodd’s desperation pass in writing, Dodd Goes for Broke with Tough Reform Bill:
A draft version of his bill introduced on Tuesday was so far-reaching it would pick a fight with virtually every entrenched interest involved in the debate, including community banks, large financial institutions, the Obama administration, House Democrats, the Federal Deposit Insurance Corp. and the Federal Reserve Board.
On one hand, I commend Dodd for looking to launch an initiative which I believe encompasses many of the best interests of the American public. Dodd would propose a single financial regulator and, in the process, strip both the Fed and the FDIC of many of their oversight responsibilities. Dodd’s proposal in regard to the Fed’s powers flies in the face of the Obama administration.
I called for a similar approach this past June in writing, “Let’s Give Barack Some Sense on Cents“:
The Fed failed to perform. Why give it more power? Obama is specifically addressing the risks within the insurance industry in designating the Fed as the authority in overseeing the entire economic system.
I believe our risks are increasing dramatically via this move. Why? Not enough checks and balances. Not enough eyes and ears and “teeth” to monitor and promote accountability. Merely because the Fed is “all powerful” does not mean that it is “all knowing,” “all capable,” and “all encompassing.”
Additionally, this concentration of power within the Fed will inevitably make the Fed more political and not an independent institution. Foreign investors will not look kindly upon that development.
With this move, I think Obama is solidifying the model as currently crafted in which institutions currently deemed too big to fail lose that fear of failure. How does the moral authority embedded in that fear of failure get embedded in other firms currently extremely large, but not quite “too large to fail?” Where is the line drawn?
Where am I left on Dodd’s proposal? I believe it addresses critically important points within our financial industry’s regulatory structure which need to be debated. I just wonder why it took him so long to find this religion.
I seriously question the integrity of a politician who has fed at the Wall Street trough for his entire career, but who now chooses to play the populist card in an attempt to save his own skin.
What do you think?