According to Politico:
Sen. Chris Dodd (D- Conn.) pledged Sunday that Congress will hold multiple hearings “right away” to explore how computerized trading allowed the markets to plunge suddenly this week.
“We need some answers pretty quickly on this issue,” the chairman of the Banking Committee said on CBS’ “Face the Nation.”
He said the Securities and Exchange Commission needs to “step up very quickly and let us know what happened here and what steps need to be taken.”
“I don’t think you need legislation in this area, my guess is,” Dodd said. “You need the regulators to step up and make sure that this high frequency trading, this flash trading that’s going on…that clearly is something we ought to take a look at.”
He appeared on CBS’ “Face the Nation” with Sen. Richard Shelby (R-Ala.), the ranking member on the Banking committee. Shelby seemed to agree with each of Dodd’s points on the flash trading issue.
“I believe what’s really happened is the technology has gotten ahead of the regulators, and the regulators have got to get ahead of the technology,” Shelby said. “That’s going to be a big challenge down the road. Otherwise we could have more of this.”
Dodd said he asked Sen. Jack Reed (D-R.I.), the chairman of the relevant subcommittee, to spearhead the Senate’s examination.
Dodd also sought to use the bizarre market behavior as another reason why Congress must pass regulatory reform next week, which he said will create an “early warning system.”
“We’re trying to deal with systemic risk,” he said. “We need to get in place our bill, have the president sign it, so we have the tools to protect our economy from these kinds of events
Probably no one is more hell bent on leaving office with financial reform finalized and enacted into law than Senator Chris Dodd. Early on Dodd declined taking over Senator Kennedy’s committees so he could aggressively work towards finance reform. The bizarre freefall in the market on Wednesday has not been fully explained yet. At first finance experts thought it was the riots in Greece. Then they attributed the fall to human error, thinking someone had typed on a B (billion) instead of M (million). Then came the computer glitch theory. So far no definitive reason has been given for the Dow’s drop in 1000 points. It regained more than600 of those points 15 minutes later. However, it was one hell of a drop that set off national panic and the markets have not yet recovered.
Chris Dodd is determinted to seek reasons and to fix the situation so it can’t happen again. Meanwhile, some of the pundits are advising selling equities. No one is saying where people should put their investments, however. Those with 401ks simply don’t have that many options open to them, as a rule.
It is time for the naysayers, may of whom simply don’t have the knowledge to make complex financial recommendations, to shut up. It is time to put partisan politics aside, for the good of us all. Macro-economics is a complicated subject and one that after a point, lends itself simply to theory. Let’s bring in all the experts and disregard those who are experts only in their own minds.
