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Senator Dodd on Banking Industry Issues
 Senator Chris Dodd, chairman
U.S. Senate Committee on Banking,
Housing, and Urban Affairs
Recently, the IBA had the opportunity to talk with Senator Dodd about some important topics pertinent to the banking industry. As Chairman of the Senate Committee on Banking, Housing and Urban Affairs, Dodd has a unique perspective on many issues. Following are a few of his answers to our questions.
How do you see the credit crunch situation affecting our national economy over the next 12 to 18 months?
As soon as the sub-prime and credit crunch crisis emerged I immediately convened the Federal Reserve Chairman Bernanke and Secretary Paulson in his office to ensure that the Fed and the Administration remained vigilant and used all the tools available to them to resolve this crisis.
Since then I have advocated for responsible steps toward helping consumers and ensuring that this kind of crisis is prevented in the future by focusing on three things - liquidity, workouts, and reform. By raising the caps on Freddie Mac and Fannie Mae, the Feds can inject badly needed liquidity into the market. This will allow responsible lenders to assist homeowners as additional fair and affordable credit becomes available to refinance homes. Workout agreements between banks and borrowers would help borrowers keep their homes, preventing widespread foreclosures. And, by instituting reforms that include protections for borrowers, Congress can ensure that we never face a crisis like this again, and that the effects of the current crisis are as minimal as possible.
Wal-Mart is among several non-financial companies expressing significant interest in getting into the banking industry. Do you believe the proliferation of industrial loan companies (ILCs) blurs the long accepted principle of separating banking from non-financial commerce?
As chairman of the Senate Banking Committee, I have long worked to ensure the safety and soundness of the financial system. I have opposed efforts to blur the distinction between commerce and banking in a way that would put deposits insured by American taxpayers in jeopardy. I believe in a banking system that serves the needs of all tax payers, including those with low and moderate incomes, and I will continue to ensure that these taxpayers are served by our financial institutions.
Some credit unions have far outgrown their originally-intended charter of serving a narrow niche of like members. When these multi-billion dollar institutions act like banks, shouldn’t they be taxed like banks?
As long as credit unions continue to operate under the original principals and intent as non-profit institutions and do not compete for market share with commercial banks, I do not support their taxation. As Chairman of the Banking Committee, I have for years and will continue as President, to closely monitor the balance and market needs of commercial banks and credit unions to ensure the current rules and regulations are fair and equitable.
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