Sen. Dodd Tries to Put Out Fire in Imus's Hair

As Chris Dodd’s tenure of nearly 30 years representing Connecticut in the U.S. draws to a close, what more fitting way to begin his goodbyes than by engaging in some intense but good-humored verbal sparring with the I-Man?

First, Dodd, the chairman of the Senate Banking Committee, told Imus that nobody will know for sure the effects of the financial regulatory reform passed by the Senate until the next catastrophe comes. “And certainly, another one will come,” he said.

The bill is designed to “at least minimize the next economic bubble or crisis,” Dodd explained. It puts into place a systemic risk council, made up of various federal agencies, that will watch over everything that happens both at home and abroad in order to provide early warnings of danger ahead.

Provisions in the bill also included preventing companies deemed “too big to fail” from being propped up by taxpayer dollars. “No longer can you count on the federal government bailing you out, those days are over with,” said Dodd, a Democrat. “If you get yourself in trouble, you’re either in bankruptcy, which is the preferred avenue, or in a receivership where management gets fired, creditors lose, shareholder lose.”

A large part of the financial meltdown of 2008 was the result of so-called “exotic instruments” like credit default swaps and collateralized debt obligations, which went largely unregulated. Until now.

The financial reform bill will “shine a light,” as Dodd said, on the derivatives market, not just to regulators but also to the market itself. In addition, the federal government will be granted the ability to break up large institutions if they get into trouble.

“So much of what occurred was in the unregulated area of our economy, the shadow economy,” he said. But whether any of this will work, he stressed, remains anybody’s guess. “We won’t really know until the next crisis comes.”

Along with passage of this bill comes the creation, for the first time in history, of a consumer protection agency focused solely on the financial sector to protect people from bad investments, or car loans, or credit card offers.

Despite the heavy presence of lobbyists in Washington, Dodd believes they sometimes provide valuable information. “It’s a first amendment right,” he said. “People are going to be down here lobbying against this bill, lobbying against it in the years to come. I don’t know of anything that can change that.”

He was similarly unknowledgeable on just how to plug the geyser of oil leaking into the Gulf of Mexico from an exploded BP oil rig. He did know, however, exactly who to blame: the Bush administration.

“What a lame excuse!” Imus cried. “The Bush administration? Have you lost your mind?”

Dodd begged Imus to calm down, saying, “To lay this at Obama’s doorstep in light of years and years of regulatory permissiveness when it comes to these operations—it didn’t occur in the last year-and-a-half,” he said. “You know that as well as I do.”

Maybe, but Imus also knows that President Obama is the one dragging his feet responding to the crisis. “He’s in office, he’s the President,” Imus said, and wondered if the Obama administration had pictures of Dodd naked, or something.

“I’m looking for a job!” crowed Dodd, who will retire in November and believes, despite a recent dust-up, that Connecticut Attorney General Richard Blumenthal is the best man to replace him.

“Just for our entertainment,” Imus told his pal. “I’m supporting the wrestling lady.”

-Julie Kanfer