Regular man is irritated with doing something that is against our best interest. The ones who are going to be regulated are angry that he will place them in a straight jacket of integrated rules which reaches all these creative derivative ideas.
This piece stood out:
http://money.cnn.com/2009/03/27/news/economy/whitford_dodd.fortune/index.htm?postversion=2009032707-snip-
However, Dodd also played a crucial role in the 1999 passage of the deregulatory Gramm-Leach-Bliley Act, which dismantled key provisions of the Depression-era Glass-Steagall Act, breaking down barriers among commercial banks, investment banks, and insurance companies. In fact, according to Ed Yingling, head of the American Bankers Association, Dodd was the bill's unsung hero. "It was about to die," says Yingling, "because Phil Gramm, on a side issue, was just hardballing it. There were seven or eight of us who were chief lobbyists for the industries. What we were saying was, 'We're running out of time. If we can get Chris Dodd in the room, we can work it out.'" They got Dodd, and Dodd got it done, but Dodd doesn't like to talk about it anymore. Not when he's trying to rebuild vital parts of the same regulatory framework he helped knock down. "I regret we didn't pay more attention to this at the time," he admits. "We're not going to go back and rewrite that. We want to be able to have those kinds of efficiencies in the system. But clearly the division between commerce and banking - that needs to be a bright line."
-snip-
The legislative challenge Dodd faces has three parts: (1) to acknowledge after decades of steady deregulation that unchecked "faith in the marketplace" is no longer warranted; (2) to replace said faith with a modern system of rules and regulations that guarantees there will be no more catastrophic meltdowns; and (3) to somehow accomplish No. 2 without sucking all the creativity and imagination out of the American financial services industry.
Some of this has been tried before. After the S&L crisis, and again after Enron, Congress drafted and passed pieces of legislation to reform the system around the edges, notably the Sarbanes-Oxley Act of 2002. But the complexities have been too mind-numbing to streamline and modernize the patchwork of agencies that has sprung up since the Civil War to oversee aspects of the financial system (see chart). "It was too heavy a lift, with a lot of lobbying to keep the status quo and no populist aspect to it at all," says a Senate aide who's been working on those issues for 20 years.
That word - "populist" - holds a clue to what Dodd has in store. It is too soon to say what kind of legislative raw material his committee will be dealing with when the time comes. Treasury Secretary Geithner outlined his proposal on March 26 on Capitol Hill, but the details still have to be worked out. For Dodd, regulatory reform starts with consumer protection. He introduced a predatory-lending bill last session that would protect homeowners from mortgages they could never hope to repay, the principle being that consumers are the canaries in the coal mine when it comes to systemic risk. Protect them, and you'll protect the system. "It won't be a question of people making choices," Dodd says, describing what he has in mind. "There will just be banned activities."
Like the administration, Dodd wants to empower a "systemic-risk regulator" - probably the Fed, although Dodd worries about compromising the central bank's independence and may want to involve other agencies - to monitor the health of the financial system as a whole; incredibly, no institution does that now. He's looking at how to align Wall Street incentives with the long-term health of an enterprise rather than short-term personal gain (hence his emphasis on curtailing bonuses). And he wants to find a way to link all the parties in the loan-securitization process so that everyone has some skin in the game - no more rogue brokers collecting signatures on blatantly toxic assets and handing off the risk to the next guy.
But his starting point in all this is that what needs robust protection is not so much banks but the customers they serve. Whether that means a federal clearinghouse for exotic financial products - "so that people actually know what these things are" - or something like a financial products safety commission, akin to the Food and Drug Administration, he hasn't decided yet. The bottom line, as one staffer puts it, is that Dodd sees the current fiscal calamity as a "spectacular failure of consumer protection."
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