How to craft a (toothless, reformless, too-big-to-fail-ignoring) bipartisan bill

dodd_100311.gi.top.jpgSen. Chris Dodd's financial reform bill may have support from both sides of the aisle, but will it actually prevent another meltdown?By Andy Serwer, managing editor


NEW YORK (Fortune) -- Washington insiders are all pumped up by Sen. Chris Dodd's pending financial reform bill. They say that it seems to have a real chance to garner bipartisan support. Yippee! That sounds great on the surface, but ask yourself WHY it seems more popular than, say, Obama's health-care bill? Reason is that Dodd's dang thing's got no teeth! Sure the bill has a measure to create a consumer protection agency within the Fed, (even that's controversial) and it would ban bank execs from being on the New York Fed's board. Then there's the real torches and pitchforks stuff, but even here, the bill is fangless. The proposed bill would allow shareholders to have "advisory votes" (say what?) on executive pay.

But the real demons -- leverage, derivatives, and TBTFS (too big to fail syndrome) -- really aren't addressed here. Limiting leverage, or borrowing by big firms, seems like a no-brainer. But it's not here. As for derivatives, yes there is some reform and some more transparency, but many companies would be exempt from the new regs, and in toto, this is really just a swipe at reining in these financial weapons of mass destruction and hardly a real attempt. And as for too big to fail, there is language about banks not being able to own hedge funds or private equity firms, or from making proprietary trades, but again this is off-point and/or half-hearted. Seems to me Wall Street has done a dandy job of lobbying against any meat-on-the-bones reform.

The real takeaway is that this is a feel-good bill, and far from the real deal. Ask yourself this: Would this bill do any good in terms of preventing the next great Wall Street meltdown? My answer: not really.

End note: Hey did you see that GMAC's ResCap, a mortgage unit of the big auto-lender has reportedly hired Goldman Sachs (GS, Fortune 500) to advise it on a possible sale? Interesting. Wonder who the buyer might be. Some have speculated Warren Buffett. But I'm wondering about Wells Fargo (WFC, Fortune 500) being the buyer. The bank could use the deal to beef up its mortgage business. A Wells spokesperson declined to comment. To top of page

Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Company Price Change % Change
Bank of America Corp... 16.15 0.00 0.00%
Facebook Inc 58.94 0.00 0.00%
General Electric Co 26.56 0.00 0.00%
Cisco Systems Inc 23.19 -0.02 -0.09%
Micron Technology In... 23.91 0.00 0.00%
Data as of Apr 17
Index Last Change % Change
Dow 16,408.54 -16.31 -0.10%
Nasdaq 4,095.52 9.29 0.23%
S&P 500 1,864.85 2.54 0.14%
Treasuries 2.72 0.08 3.19%
Data as of 9:49pm ET
Sponsors

Sections

Spencer has been a supporting member of the "Good Morning America" cast for the past three years. More

Obamacare sign ups hit 8 million, though final enrollment remains to be seen. More

Office for iPad move is a symbolic victory for Nadella's Microsoft, but the company is still weighed down by many of the same old issues. More

Schwinn, Trek and Cannondale are all iconic American bicycle brands. But none of them are made in the United States. More

As Detroit moves closer to reaching a bankruptcy deal, retired civilian workers are poised to be left worse off than firemen and police officers. More

Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer LIBOR Warning: Neither BBA Enterprises Limited, nor the BBA LIBOR Contributor Banks, nor Reuters, can be held liable for any irregularity or inaccuracy of BBA LIBOR. Disclaimer. Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.