Deputy Secretary Neal Wolin yesterday visited the set of CNBC’s
Squawk Box where, as a guest co-host, he participated in a wide-ranging discussion on financial, fiscal and economic-related issues, including the landmark Dodd-Frank Wall Street Reform and Consumer Protection Act. Deputy Secretary Wolin noted that these reforms have made our financial system significantly safer, stronger, and more resilient.
During the last hour of the show, he was joined by former Sen. Chris Dodd, one of the key architects of Wall Street Reform. Deputy Secretary Wolin asked Sen. Dodd to describe the bipartisan process that resulted in the historic new law:
Wolin: ... Senator Dodd, I would ask you this question, I think people don't understand as much as they might just how much you worked withRepublicans when you were crafting this legislation, how much their input is actually reflected in the legislation. It's sort of curious to me because so much of America supports Dodd-Frank and why is it that they're opposing this? They were involved in the process, it's a popular thing, consumer protection seems to be something that every American should want to have. What's going on here?
Dodd: …Tremendous effort reaching out to get people involved. I set up on the committee itself, teams of people to work on the derivatives section, on corporate governance, on “Too Big To Fail,” people like [Senators] Bob Corker, Mark Warner, Jack Reed and Judd Gregg just to mention a few were deeply involved in the process. We ended up with three Republicans supporting the bill in the end, I wish we had had more, the bill might have been somewhat different if that was the case but it was not for lack of trying.… The process was an open one, you didn't have super majority votes on most of the amendments with the exception of one I think during that debate, so it was an open process, it was transparent, and I reached out and sought the suggestions and ideas, in fact many of the provisions like “Too Big to Fail” were adopted. [Senator] Dick Shelby and I did that, I think over 90 votes in support of that provision of the bill, so this is a myth somehow to say it was jammed down the throats of people. We went on for two years with hearings, with invitations to industry to be a part of all of this so it was a very inclusive process.
Deputy Secretary Wolin also discussed how increased capital requirements are still our first line of defense against financial crises but explained why it should not be our only one:
Wolin: There's no question that increasing capital, dealing with leverage and liquidity are critical components of the financial reform but they're not enough. What you need in addition to that is consumer protection, which was sorely missing before, you need to regulate the derivatives market, make them more transparent, make them safer and something to deal with whathappens when big financial institutions fail, so that the taxpayers aren't on the hook for cleaning all that up. I think capital has always been, from our perspective, one of the core elements of this, and it's one of the core elements in the legislation that was passed and then signed by the President, but you need these other things to make sure that the system is safe and stable and protects all of us.
To watch more clips of Deputy Secretary Wolin on CNBC's
Squawk Box click
here.
Anthony Reyes is the New Media Specialist at the Department of the Treasury.