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DODD CONTINUES TO PRESS NEED FOR FINANCIAL REFORM

Holds Second Hearing on “Volcker Rule”, Criticizes Obstructionists Who would Kill Reform

February 4, 2010

WASHINGTON – Today Senate Banking Committee Chairman Chris Dodd (D-CT) held his committee’s second hearing on recent proposals by the Obama Administration to rein in Wall Street Banks and made the case for urgent action on financial reform.
 
“… nearly two years after the collapse of Bear Stearns, we still have not updated the laws governing our financial sector, leaving our fragile economy with the same vulnerabilities that led to the economic crisis in the first place,”  Dodd warned.
 
“I think we are at a critical juncture at this hour.  As my colleagues know, I laid out a discussion draft in November, and members of this committee have been working together, across the aisle, to come up with a compromise - if we can - ever since.  …And now we are getting to the point where we need to pull the trigger, because hard working American families can’t wait much longer for a return to economic security.”
 
“The people not in this room today want to know whether or not we get it and you get it…” Dodd said.  “But the refusal of large financial firms to work constructively with Congress on this effort borders on insulting to the American people who have lost so much in this crisis.  And, from where I’m sitting, it looks like instead of investing in improvements that would secure their financial strength, too many people in the industry have decided to invest in an army of lobbyists whose only mission is to kill the common sense financial reforms we have been working so hard to achieve.”
 
“I’ve heard all the arguments for business as usual.  But the American people have been through too much, unemployment is still too high, and the economy remains too vulnerable to support the status quo,” Dodd concluded.  “That is unacceptable.  We need to move forward.”
 
Today the Committee heard from Goldman Sachs Managing Director Gerald Corrigan, JPMorgan Chase Chief Risk Officer Barry Zubrow, Retired Citigroup Chairman John Reed,  Massachusetts Institute of Technology Professor Simon Johnson,  and Harvard Law School Professor Hal Scott.
 
On Tuesday the Committee heard from witnesses Chairman of the President’s Economic Recovery Advisory Board Paul Volcker and Deputy Treasury Secretary Neal S. Wolin on this proposal.

Testimony and webcast will be available after the hearing at:
http://banking.senate.gov/public/index.cfm?FuseAction=Hearings.Hearing&Hearing_ID=de472a35-ae01-442f-a768-b374e2849d70
 
 
Below is the Chairman’s statement as prepared for delivery:
 
“This is our second hearing this week on the Obama administration’s proposal to crack down on excessive consolidation and risk-taking within our financial system.”
 
“And I’d like to start by clarifying something I said on Tuesday.  Folks may have noticed that I sounded a little frustrated.  And they were correct in that observation.”
 
“The fact is, I think all of us are – to one degree or another – frustrated with the present situation in our country and anxious to see us get back on our feet and back on track again.”
 
“The issues that Senator Shelby and I, and members of this committee are grappling with are difficult, they are complicated, and they are terribly important.  But we have been debating them for months – in fact, some of these issues we’ve been debating for years in this institution.”
 
“But nearly two years after the collapse of Bear Stearns, we still have not updated the laws governing our financial sector, leaving our fragile economy with the same vulnerabilities that led to the economic crisis in the first place.”
 
“I think we are at a critical juncture at this hour.  As my colleagues know, I laid out a discussion draft in November, and members of this committee have been working together, across the aisle, to come up with a compromise, if we can, ever since.”
 
“I thank all of you.  This has been a very difficult job.  But they have spent countless hours working on a proposal that we can present to our colleagues and more importantly to the country, as to how we ought to fill in these gaps and move forward.”
 
“And now we are getting to the point where we need to pull the trigger because hard-working American families can’t wait much longer for a return to economic security.”
 
“And certainty.  If I have heard one word over and over and over again it’s the lack of certainty that is out there.  Part of our job is to help clarify and to provide some certainty as to where we are headed.  And our hope is that our legislation will do that.”
 
“It’s tough to take on another issue at this point.  There are wonderful ideas out there, there are a lot of things that we need to be talking about in the area of financial services.  It was never my intention to solve every issue surrounding the financial services sector.  We tried to focus on some critical ones that we think would make a fundamental difference.   But never the assumption that we could take on all of the issues raised at a moment like this.” 
 
“We need to not only fill in the gaps to address the problems that existed, but looking ahead, which is our responsibility.”
 
·         “What can we do to set up an architecture that would minimize the kinds of problems that we saw occurring from occurring again,  if not in this particular environment, where else could they emerge? 
 
·         “And are we building the structural institutions that will minimize that from happening again - beyond what we could imagine today, something ten years, twenty years from now?”
 
“That is our obligation on this committee.”
 
‘But while the specific proposals announced by the administration have come late in the game, they deserve our serious consideration.”
 
“I believe the Administration is on the right track, but finding a way to implement these proposals is no easy feat.”
 
“These are complicated issues meant to address complicated problems that leave our nation’s economy at risk.  And we need to find a balance between giving them their due consideration and appreciating the urgency with which we need to act given what is at stake.”
 
“On Tuesday, we heard from Chairman Volcker and Treasury Secretary Wolin, and I appreciate the strong cases they made for the administration’s proposals, as well as their thoughts on how we ought to move forward.”
 
“Today, we have before us a very impressive panel of experts from the industry and from academia to discuss the possible consequences of these proposals.”
 
“I look forward to hearing from you and, what’s more, I understand that for our industry friends this might feel a little like walking into the lion’s den.  But our intention here is to probe these ideas and solicit your thoughts and background experience as to how to move forward.”
 
“Let me just say: We did not embark on financial reform because we wanted to punish the industry.  I certainly did not.”
 
“We all want to create a system where businesses, large and small, can thrive.  And where the users, the customers, the people who come through your doors, can have their confidence restored that our system is sound and safe and they can rely on it when they are depositing their paycheck, buying a stock or an insurance policy, or taking out a mortgage.”
 
“The people not in this room today want to know whether or not we get it and you get it.  And we need to create a structure that allows them to have that sense of confidence and optimism that is the critical element for our economic recovery.”
 
“But the industry’s refusal – and I am not singling out our witnesses – but the refusal of large financial firms to work constructively with Congress on this effort borders on insulting to the American people who have lost so much in this crisis.”
 
“And, from where I’m sitting, it looks like instead of investing in improvements that would secure their financial strength, too many people in the industry have decided to invest in an army of lobbyists whose only mission is to kill the common sense financial reforms we have been working so hard to achieve.”
“I’ve heard all the arguments for business as usual.  But the American people have been through too much, unemployment is still too high, and the economy remains too vulnerable to support the status quo.”
 
“That is unacceptable.  We need to move forward.”
 
“And I am as determined as ever to bring a strong bill to the floor of the United States Senate.”
 
                                                            # # #
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