At last week's PLUS session, the three former employees of U.S. financial regulatory agencies reviewed some worrisome unintended consequences of the act that could impact directors and officers liability and other professional liability insurance underwriters. At the end of the session, an audience participant asked whether AIGFP would have been the subject of regulatory action if Dodd-Frank had been in place when the London-based AIG unit was engaged in the sale of credit default swaps that pushed the parent company to the brink of bankruptcy.

Mr. McCormally, the former legal staffer of U.S. banking regulatory agencies who is now a partner at Arnold & Porter in Washington, was the first to say that it would not.

"The OTS supervised AIG's parent company. They want to pretend as though they didn't," he reported. "AIG is a savings and loan holding company" and it is publicly known information that the OTS had examiners in AIG.

"They had examiners in London," Mr. McCormally said. "The passage of [Dodd-Frank] legislation would not have changed anything. The fact is the agency just dropped the ball, and they did not understand credit default swaps," he said.

Mr. Lorne, former SEC counsel who is now vice chair and chief legal officer of Millennium Management, a New York-based hedge fund manager, said he disagreed with Mr. McCormally slightly.

Now that "AIG has happened," and now that the Financial Stability Oversight  Counsel of Dodd-Frank in place, "if AIG happened tomorrow, if it was exactly the same circumstances, the FSOC would step in and do something," Mr. Lorne said.

"But if AIG hadn't happened, would they be aware of it? I think not," he said.

He added, "I think the odds of the next big calamity five years from now, 10 years from now, or 20 years from now, are not very much changed by virtue of Dodd-Frank."

Mr. McCormally, revealing details of conversations he has had with the "people in Washington who were the ones with their fingers on the button," said that those regulators suggest that the general collapse of financial system—not just AIG—"occurred so fast that nobody could react."

"No regulator had the functionality to address the issues because they were coming so quickly," these people tell Mr. McCormally, he reported.

Giving his own take, Mr. McCormally said the speed of collapse "may have been a problem because they were not perceiving problems [earlier, but] I can tell you from the inside—when I was at the OCC in 2004, 2005, we were getting information that the bubble was about ready to blow up.

"So for the [federal] agencies to suggest that it was too quick for them to react is a little Pollyannaish given the fact that they were looking at observable facts," he said.

Mr. Curtis, the former SEC director of enforcement who is now a partner with Gibson, Dunn & Crutcher in Denver, suggested that another issue that fueled AIG's near collapse was the firm's inability to assess it's own risk. "I don't see anything in Dodd-Frank that's going to change that appreciably," Mr. Curtis said.

See the Feb. 21 edition of NU magazine and the Feb. 14 and 21 editions of NU's eNewsletter Specialty Markets Insights, for more reports from the PLUS D&O conference, including more from this session about:

• The unintended consequences of the whistleblower provision of the Dodd-Frank Act

• The expected activities of the Federal Deposit Insurance Corporation to sue more than 100 directors and officers of failed banks

• The renewed interest of the SEC and the Department of Justice in enforcing the Foreign Corrupt Practices Act—an anti-bribery and accounting law that's been on the books since 1977.