Geithner: Dodd-Frank foes have financial-crisis 'amnesia'

Treasury Secretary Timothy Geithner mounted a high-profile defense of the Dodd-Frank financial reform law Friday, arguing that critics of the overhaul forget the financial crisis that spurred its creation.

In an editorial published Friday by The Wall Street Journal, Geithner called the regulatory regime in place before the crisis "tragically antiquated and weak" as he made the case for the sweeping overhaul brought on by the Dodd-Frank financial reform law.

"The failure to modernize the financial oversight system sooner is the most important reason why this crisis was more severe than any since the Great Depression, and why it was so hard to put out the fires of the crisis," he wrote. "The failure to reform sooner is why the crisis caused gross domestic product to fall at an annual rate of 9% in the last quarter of 2008; why millions of Americans lost their jobs, homes, businesses and savings; why the housing market is still so far from recovery; and why our national debt has grown so significantly."

President Obama's economic point man also sought to remind readers of the pains of the financial crisis as a way to counteract critics of reform efforts. Those who undermine Dodd-Frank are either forgetting the dangers the nation faced during the crisis or hoping others will, he argued.

"Yet only four years after the financial crisis began to unfold, some people seem to be suffering from amnesia about how close America came to complete financial collapse under the outdated regulatory system we had before Wall Street reform," he wrote. "Remember the crisis when you hear complaints about financial reform."

The editorial comes as criticisms of the financial reform law mount on Wall Street and K Street and within the halls of Congress. The financial industry, as well as Republican lawmakers, have argued that the law is too broad and too complicated and could stifle the financial sector in its attempts to limit dangers.

The actual quality of the law in the real world is largely dependent on the regulators implementing it, Geithner said, noting that they are currently soliciting public input as they tweak rules implementing its various provisions.

While Geithner acknowledged that the reforms are "not perfect," he maintained they would have served the country well before the financial crisis hit, and dampened or even averted the meltdown. And he pushed back against industry efforts to limit its reach.

"The greater error would be for Congress or the regulators, under tremendous pressure from lobbyists, to once again exempt large swaths of the financial industry from rules against abuse," he wrote.