The Dodd Days of August

Senator Christopher Dodd (D-CT) has his hands full, and his decisions in August will probably have a wide impact on the trifecta of housing, banking and commodity speculation. This trifecta, if you look at it from a macro view, is the most powerful force affecting the economy. Housing woes have impacted the bottom lines of investment banks and lenders, and this brings down the stock markets, which is pushing speculative cash into commodities and pushing up energy futures.

None of these can be solved as a stand-alone proposition, and Dodd sits at the nerve center of the policy making apparatus, as the Chairman of the U.S. Senate Committee on Banking, Housing, and Urban Affairs. His committee can help ease the situation in all three sectors by legislating financial aid to distressed homeowners, lenders and and providing guidance for regulatory oversight to the Fed, Treasury and SEC. Question is, Sen. Dodd doing enough, and is he going in the right direction? And to top it off, his legislation is now tainted by accusations of bias towards certain lenders.

The Senate passed on 26th July, by a 72-13 margin, the Housing and Economic Recovery Act of 2008, which offers up to $300 billion aid for troubled homeowners and includes a bailout for GSEs Fannie Mae and Freddie Mac. But even before the ink is dry, the bill has run into bureaucratic and partisan implementation headwinds.

While the homeowner aid was a bipartisan affair, the bailout for the GSEs was opposed by prominent Republicans including the ranking member Sen. Charles Grassley (R-Iowa). And there seems to be a disconnect between expectations for an implementation time-frame. Dodd says he won't tolerate a 'slow-walk' on this and expects the program to begin Oct 1 2008, while The American Banker cited an unnamed HUD spokesperson that it could take a year to 'finalize' the program. Sen. Dodd has called together a meeting on Tuesday with top officials from the Federal Reserve, FDIC, Treasury, and HUD to clear it up.

Meanwhile, the recent flap over his special loans (background) has still not died down, and Dodd is being pummeled over the fact that the Housing bill helps ease the pressure on lenders like Countrywide. be that as it may, fact remains that the bill, if and when its actually implemented, will ease pressures on home-owners and mortgage lenders.

Which leaves commodities speculation. On Friday, the Senate blocked a vote on legislation to clamp down on speculation in the energy markets - Stop Excessive Energy Speculation Act of 2008, S. 3268. Republicans managed, by a 50-43 vote. The bill would have placed a limit on the amount of speculative trades by traders who aren't buying futures to actually offset their exposure to the actual commodity.

While this issue nominally comes under the purview of the CFTC and the Senate Committee on Energy & Natural Resources chaired by Sen Jeff Bingaman (D-NM), the question of runaway speculation has brought other Senate Committees, the Federal Reserve and other parties into the picture. Its a given that none of them will be able to move even an inch further in trying to regulate the energy markets, given the partisan nature of the issue.

If any legislation, or regulatory update on commodities trading is to pushed through, it will have to come with the approval of the Federal Reserve, and it will have to come with approval from Dodd's Committee. Which, given that he's now the target of right-wing accusations about his personal loans, is not very likely. For the record, Dodd is trying to address these concerns, and he has said that he plans to make a full disclosure about his loans after the foreclosure rescue bill is passed into law by the President, which means he'll come clean anyday now.

So the question here is, every action that Dodd takes or might take, to help ease the crisis, is being bracketed and hindered by his personal issues. Maybe its time for Sen. Dodd to put Country before self, and even though it may be unfair, to step down because him being the Chairman of the Senate Banking Committee is actually hurting the chances of getting some concrete results out of Congress.

Reference:
http://banking.senate.gov/public/_files/HousingandEconomicRecoveryActSummary.pdf
http://dpc.senate.gov/dpc-new.cfm?doc_name=lb-110-2-117
http://blogs.wsj.com/economics/2008/07/26/dodd-demands-meeting-with-fed-treasury-officials/
http://www.americanbanker.com/article.html?id=200807250C5X6HK6
http://online.wsj.com/article/SB121702679230086263.html
http://www.upi.com/Top_News/2008/07/25/Dodd_to_release_loan_information/UPI-73831217037459/

Comments

[casey00001:]

Simply put, Christopher Dodd is an ass. He will be forced to resign and can look forward to playing "Go Fish" with Elliot Spitzer.

2008 Jul 27 08:03 AM

[xsuddensam:]

Right on Casey! Dodd is a crook.

That's why he uses euphemisms like "poor lending practices" and "lack of transparency" instead of the word FRAUD.

2008 Jul 27 08:35 AM

[Omaha_29:]

Guys.....its Washington----there are no crooks there---just public servants

2008 Jul 27 09:23 AM

[notsosmart:]

our sen.claimed he did not know about mortgages so he was led to countrywide in cal. even though he represents ct.as if we have no banks in ct.on top of that he was busy running around trying to get the nomination for pres.instead of trying to head of this mess.how sad for our country & its citizens to be governt by these (not public)but self serving people.this guy will never resign.i hope the people of ct. are smart enough to vote him out. unless im mistaken his father was a crook that had to resign.

2008 Jul 27 11:00 AM

[rm:]

There are so many issues with this legislation going forward, you've just scratched the surface.

It's laughable how the "help 400,000 borrowers" is unquestionably bandied about, without any qualification whatsoever.

You'd think that SOMEONE would attempt to be conservative in their predictions, especially in light of how far short to expectations the previous initiatives have fallen.

2008 Jul 27 11:08 AM

[CaptBob:]

This is one Senator that is 100% absolutely proven-DIRTY!

The only thing he should be concerned with is how to make a living, working in the "Real World".

He is incapable of even generating a good excuse!!
Can you imaging the Chairman of the Senate Banking Committee--
"Not knowing the range of home mortgage interest rates given by banks"????

A CROOK IS A CROOK!!!

Fooogetttabout it!!!

2008 Jul 27 11:35 AM

[notsosmart:]

captbob-so right.

2008 Jul 27 11:42 AM

[EUARTE:]

Dodd is a cheap little politican whose only answer to everything is to debase the currency.

2008 Jul 27 12:24 PM

[HarryHope:]

The homeowners don't need help other than postage to mail in their keys. Then they can rent a comparable home for as little as half as much they're paying for their mortgages. It's the banks that need help to get them out from under the mess they've made to create wealth for themselves. It's the banks, that will end up with the taxpayers' money while the homeowners continue to go upside down as home prices revert to mean; i.e. affordability at 2.5 family income. Long way to go and taxpayers will end up on hook.

Dodd is his father's son.

2008 Jul 27 12:28 PM

[Jimmy Lathrop:]

The Right Honorable Senator represents the constituencies of the MTA Metro North line. If you are curious as to his stance on the state of the economy, you only need to see the communities who ride the train from New Haven to Grand Central Station to understand his motivation.

He represents the barons from Greenwich, Stamford and New Caanan who own hedge funds, run banks and are the captains of industry. Its one thing to make policy for the nation. Its another thing to be hissed at whilst moving from train car to train car trying to find a seat. Rather than take a real stand on the economy and risk being forced to stand on the train, Messr. Dodd has chosen to sit on his hands to protect his Gold Coast cronies and to sit comfortably amidst the Republican financial service special interests who vote Democrat because he makes no bones as to his true master - the individuals who drove the economy into the ground.

Do not fail him for his inability to articulate the full thrust of his mercenary behavior. It's just hard for him to articulate the strong emotion he feels when confronted by a money manager who is upset that he may have to sell a vacation home because of some inconvenient truths.

Connecticut, like other fantastical places such as Long Island and California, are big on government projects, while the rest of the nation pays for them.

If you are a religious person, please pray that Obama nominates Dodd as his running mate so that Dodd must relinquish his committee seat. The Right Honorable Senator should apply his talents to a job befitting his past record - such as attending state funerals in Kazakhstan and other ceremonial functions where he will do little damage. Of course, you will need to throw in a prayer for Mr. Obama's health as well. Thankfully, prayers are free. For now.

2008 Jul 27 12:39 PM

[notsosmart:]

you dont really think dodd is ever on a train,do you? yes,he is his fathers son.rep. or dem. it makes no difference anymore.most dumb-dumber americans cant name their own sen or congressperson. they cant name 3 supreme court justices(maybe not even one).on & on & then the taxpayer wonders why he is getting screwed from local govt. to dc.the world is loving our downslide & laughing as we help defeat ourselves.as long as the beer swillers fill the stadiums nothing will change.

2008 Jul 27 01:13 PM

[CaptBob:]

Smart: I would forgo the stadium any day I could catch Dodd even in the vicinity of a train then something would change and it would be good cause to swill several beers.

Getting a bit crowded under that Bus where everyone's being thrown--diversificatio... is good!--right??

If we all went down to the track for a justified toss, we'd derail the train. Which would be nothing new for a Govt. operated enterprise like Amtrak would it?--Is there no hope??.

2008 Jul 27 01:38 PM

[notsosmart:]

there mut ave been some romans who said"is there no hope". nope ? no hope. empires begin th downward spiral @ app.200 years.nothing unpatriotic here-just history.its china & india arising.there is not enough so tha all can drive a hummer to the memorial day car race.globalization will begin to even out the standard of living but we are on the downside-started alreadyready or noy.

2008 Jul 27 03:59 PM

[kurt walter:]

The more money congress takes via taxes, the more money they spend. It isn't their money, so they do give a rip about spending it.

2008 Jul 27 04:38 PM

[kurt walter:]

Dodd is pandering socialist. I really wish nobody would vote for an incumbent in November. We could clear out the lowlife in the house of representatives, bring all new blood to the house. And we could get rid of 1/3 of the Senate.

2008 Jul 27 04:47 PM

[gps_geek:]

GSE's, when they made money, they were a private company (whose
management made lots of $$$)...when they lose billions they get the taxpayers to bail them out...

Thewy should be re-named GSCE...Government Sponsored Criminal Enterprises...

Sen. Dodd should be the new CEO....

2008 Jul 27 05:13 PM

[secmaven:]

There is big money to be made, ultimately, from the housing meltdown. The boys with the cash will own the real estate, the taxpayers will own the worthless debt and the banks will come out clean.

2008 Jul 27 08:26 PM

[notsosmart:]

well it looks like maybe theres a slight awakening.regardless of your party all incumbents should be voted out.since congress has a 9% approval rating how wrong can this be.

2008 Jul 27 10:53 PM

[bowman711:]

I seem to recall the last time Congress decided to 'help' the American consumer of petroleum products were the price controls about 1973, In that case, all they accomplished was to dry up American exploration and further increase U.S. dependence on foreign oil. Then, the 1978 Iran hostage taking and resulting oil crisis happened. That resulted in 'astronomical' price increases, with reduced domestic ability to supply the needed oil.

We hear over and over again about planned or at least suggested attacks on Iran's nuclear program. Is Congress trying to reduce 'speculation' now to cause another astronomical rise in price in the event of a major world event such as an attack on Iran? If traders are not allowed, or have reduce ability to hedge against such events, guess what will happen when they actually do happen? I'd guess the increase in prices of oil would far more than outweigh any 'protection' for the consumer now.

2008 Jul 27 11:27 PM

[jeezum:]

Speculation needs to be brought into control, but more importantly, restrictions on drilling of offshore known reserves and Colorado Shale must be lifted. Just the fact that we WILL be drilling, is enough to cause the price of oil to come down to tolerable levels. If it continues at present price levels, we are going into depression as everything we do in this nation is dependent on affordable energy prices. Airlines, trucking, service industries such as FEDEX and UPS are being hammered. The airlines are going to go under, The railroads have let their tracks depreciate. They will not be able to accommodate the travel needs of the American public. And the restriction on offshore drilling is being held up for political expediency of the majority party.
Yes they all need to be ridden out of DC on a trail.

2008 Jul 28 01:34 AM