Dodd Uses Market Spasm to Make Case for Financial Reform

Posted May 9, 2010 at 10:43am

Senate Banking, Housing and Urban Affairs Chairman Chris Dodd (D-Conn.) on Sunday used last week’s nosedive in the stock market to further his case for passing the financial regulatory overhaul.

Speaking on “Face the Nation,” Dodd said Thursday’s market plunge raised a host of questions over “high-frequency trading” and to what degree it is being regulated. He said the curious drop — at a time when he said the overall U.S. economy is showing growth — must be reviewed, and it underscores the need for the Wall Street reform bill.

“We need to get in place our bill and have the president sign it so we have tools to protect our economy from these kind of events,” Dodd said.

The Senate is poised to wrap up work on the financial reform bill as early as this week.

Banking ranking member Richard Shelby (R-Ala.), speaking on the same program, said this week’s stock market free-fall could have resulted in disaster. He said he’s awaiting answers from “forensic experts” to spell out exactly what occurred and how it can be avoided in the future. The Dow Jones industrial average fell hundreds of points and then largely bounced back in a mysterious turn of trading late last week.

“What’s really happened is the technology has gotten ahead of the regulators, and what has to happen is the regulators have got to get ahead of the technology,” Shelby said.