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GWSB Joins Financial Reform Debate

Former U.S. Sen. Christopher Dodd speaks at GW about the impact of financial reform legislation. Photo Credit: GW Today

Business executives, scholars, financial regulators, bankers and journalists came together at The George Washington University to debate the potential impact of the most sweeping U.S. financial regulatory reform in 80 years, even as the legislation’s author defended the measure.

The Jan. 14 symposium titled “The Shape of Things to Come: The Financial Regulatory Landscape in the Post Dodd-Frank Era” drew nearly 250 people.  Former U.S. Sen. Christopher Dodd (D.Conn), one of the authors of the legislation, spoke at the event.

“The need for serious financial reform seemed clear” after the 2008 recession, said Dodd, who worked with U.S. Rep. Barney Frank (D. Mass.) on the Dodd-Frank Wall Street Reform and Consumer Protection Act, which calls for the broadest financial market reform since the Great Depression.

“You want a robust financial services sector that is out there being creative, being innovative, driving growth and powering the economy,” Dodd said.  “But, at the same time, you want to make sure that the horse doesn’t run away from us.  Financial regulation had simply failed to keep pace with the times.”

Both Dodd and critics said the measure’s impact will be more evident once rules are in place for the more than 200 new regulations.

Discussion at the broad-ranging conference included debate on how Dodd-Frank would affect banks’ capitalization, coordinate with new Basle III accounting standards and guard against financial institutions that are “too big to fail.”  Panelists included Goldman Sachs adviser Stephen Labaton, Donald Kohn of the Brookings Institution, Chicago Mercantile Exchange Clearing House Division President Kim Taylor and Robert Burke, managing director and co-head of Global Futures and Derivative Clearing at Bank of America Merrill Lynch Global Markets.

GW School of Business Dean Doug Guthrie said the conference underscored how its Washington, D.C., location put the School at the “center of conversations between business and politics, business and policy.”   The conference was sponsored by GW’s Center for Law, Economics & Finance and the School of Business Center for Real Estate and Urban Analysis.

Lynn Turner, senior adviser to international forensics and economic consulting firm LECG, told the audience that Dodd-Frank was “a good start, but it’s just a start.”  Turner, the former chief accountant with the Securities and Exchange Commission, said the agencies tapped to enforce the regulations have neither the funding nor technology they need. And David Wessel, the Washington bureau chief for The Wall Street Journal, said the bill raises fundamental questions:  “Do we want to have a lot of rules so everything’s clear, so we know what to do if someone gets in trouble? Or do we want to equip the regulators with a lot of discretion to do what they need to do?”

But Gary Gensler, chairman of the U.S. Commodity Futures Trading Commission since May 2009, defended Dodd-Frank as a “historic” measure that will bring transparency, accountability and competitiveness to the derivatives market.  To watch the video of his speech, click here.

Annamaria Lusardi, GWSB professor of accountancy and economics, told the audience that regulation must be complemented by improved financial literacy among Americans.  Dodd, meanwhile, urged students to consider careers in government regulatory agencies, saying “Even with all the technology in place, if you don’t have good talented people in place, then I think our country suffers.”

Posted by gwsb on January 19, 2011 | Filed under: GWSB News.


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