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'Act of Congress' Details Sausage-Making That Was Dodd-Frank Law

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Kaiser’s book begins with a Sept. 18, 2008, meeting of congressional leaders, Treasury Secretary Paulson and Federal Reserve Chairman Bernanke.

Whether Dodd-Frank has addressed “too big to fail” is an open question. While supporters and the administration say the law allows no more bank bailouts, the six largest bank holding companies account for close to 75 percent of all bank assets. Given this concentration, the Dodd-Frank Act may only be good until the next big crisis.

The book has the feel of the winners writing the history, as most of those cited by Kaiser are Democrats, and there are plenty of sour grapes to go along. A Dodd staffer recounts that Republican staffers say they will be available to talk, but then are not. Lincoln, no longer in office, comes under particular scorn for her derivatives proposal, both by the author and by staffers mentioned in the book. Her amendment was a “truly horrible experience,” according to a Democratic staffer cited in the book.

Many of those involved lacked experience. A Treasury official discussed having “intense, blank-sheet-of-paper sessions” with colleagues, only to discover that most of these brainstorming sessions led to ideas that others had already suggested. Derivatives have been a big issue in Washington for 20 years. The officials at Treasury, most of whom had little banking experience, were never likely to come up with new ideas by brainstorming.

Dodd-Frank’s most lasting legacy will be the Consumer Financial Protection Bureau. Obama added fuel to the fire by naming its director via a recess appointment, outraging many in Congress. Republicans won a pyrrhic victory in keeping Elizabeth Warren from becoming the agency’s director. She instead ran for Senate in Massachusetts and beat Republican Scott P. Brown in 2012, who might otherwise have retained his seat.

Peter Feltman is an analyst for the CQ Roll Call Washington Securities Briefing.

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