The Financial Stability Oversight Council's mission to identify systemically important non-bank financial institutions is necessary, former Sen. Christopher J. Dodd said Tuesday at an event marking the fourth anniversary of the Dodd-Frank Wall Street Reform and Consumer Protection Act.
Mr. Dodd, now chairman and CEO of the Motion Picture Association of America, noted the law he co-authored had bipartisan support after the financial crisis and was needed to update a “century-old” regulatory system.
“One thing I thought about all the time was confidence,” Mr. Dodd said at the Washington event hosted by the centrist think tank Third Way. “Our financial services structure had lost the confidence of investors and consumers.”
Mr. Dodd said he recognizes “legitimate concerns that people have about an over-duplicative regulatory environment,” but he defended the FSOC's scrutiny of non-banks. “It's not size alone; it's complexity and interconnectedness” that require capital and liquidity standards, he said.
“If the U.S. didn't lead on this issue, someone else was going to,” Mr. Dodd said. While the financial situation that led to passage of Dodd-Frank “was a European and U.S. crisis … the next crisis” will involve Russia, China, Brazil and other countries, he said. “You try putting that genie back in the bottle.”
