Dodd outlines financial reform bill

Hartford, Conn. (WTNH) - Sen. Chris Dodd (D) formally presented his bill that would regulate the financial industry earlier this week and today, News Channel 8's Mark Davis asked him how it would help you.

Read a summary of the bill

"We should never ever again ask a taxpayer in this state or anyplace else to bail out some financial firm because it got so complicated, so inter-connected, so large that you had that implicit guarantee the if you got yourself in trouble; the taxpayer would write a check and bail you out," Dodd said.

Dodd says that's what his proposal would do, but critics are already saying that under his plan many big financial firms would be declared too big to fail by being classified as "systemically significant."

Dodd says not so.

"This bill is designed to shut down that prospect forever by insisting that you end up in receivership or, if there is some resolution mechanism, it is so painful to go through, all your management goes, all the shareholders lose their investments," he said.

The plan would establish a Systemic Risk Council to watch all insurance lines and products, and to watch for global developments, like the one in Greece right now. It would also monitor exotic instruments like over the counter derivatives, credit swaps, and other exotic investment schemes.

And for the average person, it establishes a financial consumer protection agency. For example, if you thought you were taken advantage of by a mortgage broker, you would turn to this new agency.

"We don't think anyone ought to be taken advantage of when you buy a product that you drive or use or consume. You ought not to be adversely affected by a financial product that you buy to consume," Dodd said.

Dodd points out that this bill is likely to be just as controversial as the health care bill.