The Republicans' claims that the $50 billion "orderly liquidation fund" in the Restoring American Financial Security Act would "guarantee bailouts" have been pretty thoroughly debunked at this point, but I'm reading through the comments on the OpenCongress bill page and there still seems to be some confusion. For example, the highest rated comment right now is an attempt to fight back against the Republican bailout claim, but it still gets it a little wrong. "My understanding is there is a fund, funded by the banks themselves to bailout the large banks. So it doesn't impact taxes and it just means they have to bail themselves out not the government," the commenter writes.
That's not quite right. There is a fund in the bill (the "orderly liquidation fund") that would be funded by the big banks in order to keep taxpayers from being on the hook if they fail, but the fund would be used to put failing banks to death, not to bail them out. With bailouts, banks get rescued by the government and survive. Under this bill, failing banks would be executed by the government. The orderly liquidation fund would provide the working capitol the F.D.I.C. would need to carry out the complicated process of winding down big, failing banks.Read Full Article
The Democrats really do seem to have a new fire behind them as they are starting to take up financial reform. Yesterday, we heard that Sen. Blanche Lincoln [D, AR] of all people would be leading the Democrats on a tough derivatives reform bill. Today, Banking Committee Chairman Sen. Chris Dodd [D, CT] took to the Senate floor and unhesitatingly fought back at Minority Leader Sen. Mitch McConnell's [R, KY] false claims that the financial reform bill would lead to endless bank bailouts. Here's the video:Read Full Article
Senate Minority Leader Mitch McConnell [R, KY] went before the Senate this morning and repeated a line from Frank Luntz's financial reform talking points memo that the Democrats' financial reform bill would lead to endless taxpayer bailouts of the big financial firms. Ezra Klein does a good, realistic debunking:Read Full Article
It's been almost two months since the House of Representatives passed their bill to overhaul regulations in the financial markets and implement some of the lessons learned from the financial crisis. The Senate, on the other hand, still hasn't taken up the issue. Since November, the Senate Banking Committee has been working to modify a draft version of a financial reform bill that was submitted by Chairman Chris Dodd [D, CT]. The committee has already missed several deadline for completing the bill and forwarding it to the full Senate, and they're now looking at trying to get it done before the President's Day recess, which begins on Feb. 12.Read Full Article