Today in Washington, D.C. - May 4, 2010 - More Flaws In Dodd Bill: In Summary, It Sucks!

Because the Democrats won't let go of trying to control all aspects of America, the Senate continues consideration of S. 3217, the Dodd financial regulation bill. Votes on amendments are expected today. Pending to the bill is the first Democrat amendment from Sen. Barbara Boxer (D-CA), which is designed to prevent taxpayers from being on the hook for more bailouts. Democrats had previously spent two weeks claiming bailouts were not in the bill.

Speaking on the floor yesterday, Senate Republican Leader Mitch McConnell said, “I’ll just note as we continue this debate [on the Dodd financial regulation bill] that a consensus seems to be emerging among the experts and the public about two things: first, that it would be deeply irresponsible to rush a piece of legislation this far-reaching without fully understanding its potential impact on ordinary Americans who had nothing to do with the financial crisis. Second, any bill that comes out of the Senate must actually address the core problems that led to the crisis.” Unfortuantely, neither of these relevant point have stopped the Democrats on their other bills.  And yet every other day, it seems, a new story surfaces about how the Dodd bill either doesn’t fix the core problem or overreaches to adversely affect Main St. businesses in trying to regulate Wall St.

The AP reports today, “A Senate [Democrat] measure advertised as protecting taxpayers from another Wall Street bailout would still leave them fronting the money if the government moves to liquidate a big failing company like insurance giant AIG. Taxpayers could end up putting up billions of dollars to cover the costs of dealing with such a firm and be able to recoup that money only over a period of five years, under the Senate's sweeping overhaul of financial regulations.”

Of course, Democrats asserted for weeks that any suggestion that their bill allowed more bailouts was dishonest.  They all but accused Republicans of being liars when it was pointed out that the Dodd bill perpetuates bailouts and doesn’t end “too big to fail.” President Obama said last week, “[W]hat’s not legitimate is to suggest that somehow the legislation being proposed is going to encourage future taxpayer bailouts, as some have claimed.” Sen. Dodd himself said, “[O]ur bill stops bailouts by literally eliminating any possibility for the government of the United States to bail these firms out.”

But many other problems with the Dodd bill are coming to light. According to The Washington Post, “A dramatic proposal that could force banks to spin off their derivatives businesses, potentially costing them billions of dollars in revenue, has run into opposition on multiple fronts as the Senate prepares to take up legislation to remake financial regulations. Obama administration officials, industry groups, banking regulators and lawmakers from both sides of the aisle have taken aim at the measure proposed by Sen. Blanche Lincoln (D-Ark.), chairman of the Senate agriculture committee. Their main objection: If a central goal of regulatory overhaul is to make financial markets more transparent and accountable, Lincoln's provision would have the opposite effect. Barring banks from trading in derivatives would force those lucrative business into corners of the market where there's even less oversight, critics warn.”

Beyond the financial provisions of the bill, there are serious concerns that regulations intended to rein in Wall Street are so far-reaching and overbearing that they will affect many businesses that had nothing to do with the financial crisis. Last night, The Hill reported, “Dentists are warning they may become unintended targets of legislation designed to overhaul Wall Street. Lawmakers and lobbyists have clashed for more than a year over whether a new consumer financial protection office would cover industries and companies that had nothing to do with the financial crisis of 2008. . . . Dentists could fall under the Senate financial bill because they often allow patients to pay in installments, [American Dental Association managing director of government affairs Michael] Graham said. According to a 2009 ADA survey, roughly half of dentists offer this type of billing for three or four months.” And even some Democrats are raising the same concerns. According to The Hill, “Rep. Nydia Velázquez (D-N.Y.), chairwoman of the House Small Business Committee, told Dodd it was ‘more than likely’ that small healthcare practices, including dentists and physicians, would fall under the scope of the new regulator.”

So far we’ve learned that the Dodd bill doesn’t end taxpayer bailouts of big financial companies (something Democrats tacitly admitted with their first amendment to the bill), that it could drive derivatives markets offshore and provide less accountability, that it could adversely affect major employers across the country, and that small business owners like dentists could fall under its regulatory reach. While this bill needs significant changes before it’s ready to be passed, let's summarize the Dodd Bill: It Sucks!

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