Sen. Chris Dodd (D-Conn.) revealed his long-anticipated financial reform bill Monday, which he said would provide a better regulatory framework than the existing system that has grown "hopelessly inadequate" in the wake of the financial crisis.
The bill, Dodd said, would prevent a future bailout by providing a mechanism for the government to shut down failing institutions that are threatening the economy through either bankruptcy or resolution
"Never again should the American taxpayer be asked to write a check because of an implicit guarantee that the federal government will bailout a company when it collapses if it threatens the stability of the economy as a whole," Dodd said.
The bill would also discourage institutions from becoming "too big to fail" through more stringent capital requirements and improved supervisory protections.
The bill creates a consumer watchdog agency would be housed within the Federal Reserve. Dodd said the agency would be wholly independent, with its own budget and a presidentially-appointed director. It also establishes a systemic risk council tasked with monitoring the financial system for activities that could contribute to a future crisis.
Other provisions promote whistle blowing at the Securities and Exchange Commission, enhance accountability for credit rating agencies and make the head of the Federal Reserve Bank of New York a presidentially-appointed position.
Though Dodd introduced the bill alone and did not receive the bipartisan support he had hoped for, he emphasized contributions made by Republican Sens. Richard Shelby of Alabama, Bob Corker of Tennessee and Judd Gregg of New Hampshire.
Markup of the bill is scheduled to begin next week.
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