Appearing together in public for the first time since theirretirement from Congress, former Sen. Christopher Dodd, D-Conn.,and former Rep. Barney Frank, D-Mass., took a retrospective look atthe landmark legislation bearing their names.

Speaking at the MarketCounsel annual conference in Las Vegasbefore an audience of 400, mainly investment advisers, the twoex-lawmakers reflected Wednesday on the politics of the legislationand at times defended controversial aspects of the law passed inJuly 2010, such as its 2,300-plus pages.

Dodd set the scene by noting the ad hoc nature of the governmentresponse in the early days of the financial crisis, when FederalReserve Chairman Ben Bernanke advised a group of key legislatorsthat “unless you act within a matter of days the financial systemof this country and a large part of the world” was on the verge ofcollapse.

Because of the importance of the Troubled Asset Relief Program,Dodd said, he asked members to vote from their chairs — a formalityreserved for wars, constitutional amendments and other such seriousmatters.

Dodd said he told some Republican colleagues he didn't needtheir votes for passage, but some, like Gordon Smith of Oregon andBob Bennett of Utah, voted for TARP anyway because they felt it wasthe right thing to do. They then lost their seats in re-electionfights.

As the system stabilized through TARP and a more permanentsolution was sought, the two legislators crafted a law that wouldtoday obviate the need for a TARP-style emergency measure.“Everything we did in fall of 2008 is (now) against the law,” Doddsaid.

The senator emphasized that Dodd-Frank was not intended topunish anybody. While its mandate was broad — seeking to end “toobig to fail” and bolstering consumer protection were some of itsobjectives — “the one key goal was 'How do you restore trust andconfidence in the system?'” Dodd said.

“Close to $13 trillion evaporated in a matter of months, most ofwhich will never be recovered by those who lost it,” he added.

Net Page: Tracing the Controversy

Dodd's congressional counterpart traced thecontroversy around the legislation to an intense and what heregarded as unprecedented level of partisanship. Noting thatRepublican appointees such as Bernanke, Bush administrationTreasury Secretary Hank Paulson and FDIC Chair Sheila Bair allsupported financial reform, Frank said that in 2009, “Barack Obamagot behind it and the Republican party decided to go intoopposition.” Previous financial reform acts such as Sarbanes-Oxleywere bipartisan, he added.

The two men defended the massive size of their legislation.Frank compared it to the financial reforms of the New Deal era,such as laws creating the Federal Deposit Insurance Corp. orestablishing the Investment Company Act. “We put in one packagewhat they did in 10,” Frank said.

“Their bills (in the New Deal era) were 20 and 30 pages, butthey were sweeping proclamations,” Dodd said. But he added that intoday's global financial markets, there was a need to provide morespecific guidance and to harmonize U.S. laws with those of theEuropean Union particularly. “I wanted my country to be a (leader)… rather than just follow along,” Dodd said.

A hot topic for MarketCounsel's investment advisor audienceconcerned the law's failure to draw clear distinctions betweenbrokers and investment advisers.

Dodd was philosophical, and regretful, about that, saying“Taking on that issue could have killed everything else.”

The votes just weren't there, he said, adding “Certain issuesyou can take on; certain you can't.”

While the men stand behind the law, Frank has been critical ofsome of the proposals dreamed up in its implementation.Specifically, he has raised concerns about efforts to expand therange of institutions considered systemically important — andtherefore needing further oversight — to include giant assetmanagers.

“I don't think Fidelity and BlackRock will be next,” he told theMarketCounsel audience.

The problem that Dodd-Frank was meant to address concernedfinancial “institutions that had accumulated debt that theycould not repay,” he said. “I don't see Fidelity being in aposition where it incurs debt that it cannot repay.”

That said, Frank cautioned that in the unlikely event a largeasset manager discovered some highly unconventional means ofoverleveraging, then the institutional ability to deal with such asystemic threat exists through the Financial Stability OversightCouncil the law put in place.