Christopher Dodd's Regulatory Reform is An Act of Courage

The Dodd Bill that was just unveiled does several things:

(1) It enables greater control over banks,

(2) It enables the government to orderly unwinding of those banks that were previously believed to be too big to fail,

(3) It facilitates some supervision of large hedge funds, and

(4) It implement some level of consumer protection where highly complex derivative instruments are involved.

It is not a bill to destroy the financial industry. However, it is not regulation which would ever gain the support of the financial industry. The regulation therefore can only be put through by someone who does not need to answer to the banking lobby in a re-election campaign.

As Dodd said, this regulation isn't going to stop the next crisis. It however may help to prevent it and it will certainly help to limit the consequences of it.

I applaud Dodd for taking a bold step.