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Law360 (July 21, 2020, 9:59 PM EDT) -- One of the creators of the Dodd-Frank Act said Tuesday that the sweeping set of regulations enacted a decade ago has allowed the country to stave off a COVID-19-related financial collapse.
Chris Dodd, a Connecticut Democrat and former senator, said the landmark financial reform law enacted 10 years ago to the day has allowed banks to build up a safety net that has prevented the country's economy from falling into a "deep hole."
"I think we would have collapsed economically," Dodd said during a webcast hosted by the advocacy group Better Markets. He noted that banks' buildup of capital, ample liquidity and "their ability, their profitability and their strength" have helped prop up the economy in recent months.
Without the act he co-sponsored, Dodd said, "We'd be in such a deep hole, I worry if we could get out of it."
He acknowledged that "we've got a long way to go" and that "deep economic problems" persist, but they "would have been far, far worse had we not done what we did 10 years ago."
Dodd was accompanied by former Rep. Barney Frank, D-Mass., the act's other co-sponsor, on a web conference that also drew former President Barack Obama and Sen. Elizabeth Warren, D-Mass., to reflect on the law's passage.
As discussion about COVID-19 progressed, Frank expressed support for the trillions of dollars of relief that the federal government has doled out to individuals and businesses under the Coronavirus Aid, Relief, and Economic Security, or CARES, Act.
He contrasted the current government relief efforts to the Troubled Asset Relief Program, or TARP, which was signed into law by President George W. Bush on Oct. 3, 2008, and was widely recognized as a "bailout" of the country's banks.
"We are talking here about compensating people for something that was done to them, not by them," Frank said. "The problem with the TARP was that the many of the recipients of the TARP funds were the malefactors. ... The banks were the villains, many of them."
Asked about concerns regarding potential fraud stemming from the CARES Act, Frank said he was "not as concerned as some of my friends."
He noted that the possibility of "people in need, children who are stressed, parents who can't make it, people facing eviction" not getting gravely needed help far outweighs potential bad actors getting assistance when they shouldn't be.
"I err on the side of compassion," he said, adding that the difficult task of delivering the massive amount of funds quickly has "on the whole been done very well."
The duo went on to speak about the lasting impacts of Dodd-Frank, noting that the "heart" of what the law created remains in place despite some modifications, echoing recent comments by industry experts who reflected on the act's passage 10 years on.
Dodd also pointed to a recent Supreme Court decision that called into question the limitations placed on a president's authority to fire a CFPB director, but which supported the bureau's constitutionality more broadly.
"I'm disappointed by some of the decisions, but I want to remind people in this conference: We're not going anywhere," Dodd said, who noted in a Monday op-ed that the role of the CFPB is particularly important amid the pandemic. "The heart of what we did 10 years ago is the law of the land today in the United States."
Obama, in opening remarks at the conference, spoke similarly.
"In the years since I've left office, the same forces that opposed us back then have been doing their best to undermine the law," he said, according to a transcript. "And while they've had some successes, the core of Wall Street reform remains intact."
In her remarks, Warren focused on the Supreme Court opinion and defending the CFPB.
"Republicans have engaged in one harebrained scheme after another to undermine the agency's leadership," she said, according to a transcript.
"But after years of industry attacks ... the Supreme Court recognized what we knew all along: The CFPB and the law that created it are constitutional."
--Editing by Adam LoBelia.
Update: This story has been updated with a link to Dodd's op-ed.
For a reprint of this article, please contact reprints@law360.com.
