At 1,336 pages, the Dodd financial services regulation bill proposal, which the Senate Banking Committee will begin to consider today, includes language that could create a permanent bank bailout. It is also filled with other significant issues, any one of which could cause serious damage to the economy or consumers by allowing bureaucrats to micromanage financial services firms and require than to meet political priorities. Unfortunately, Sen. Dodd says that he wants the Senate Banking Committee to rush through the bill this week and then to send it to the Senate floor for equally swift passage. This is completely the wrong approach to this issue.
As with any long and complex financial regulatory bill, Dodd’s bill should be closely and thoroughly reviewed before it is voted upon in committee or on the Senate floor. Regardless of whether the bill is approved, anything less than careful examination is almost certain to have unintended consequences due to innocent drafting errors, poorly described policy decisions, or just plain bad policy. Rather than acting in haste and repenting at leisure, the Senate should carefully examine each and every section of the Dodd bill before taking any votes. Rhetoric can be a powerful motivator in politics, but quick action on all but the simplest areas almost always results in bad decisions that can have lasting effects.