Remember last week when Senate Republicans filibustered beginning debate of the financial reform bill three times in three days over objections to a liquidation fund that they said would be used in the future for bailouts? Well, the fund was officially removed on Wednesday by a an overwhelming vote of 93-5. That makes everyone happy -- the Republicans who called it a bailout, the banks who didn't want to pay into it, and the Democrats who didn't really care much about it and would rather have Republican cooperation.Read Full Article
After being forced by Democrats to go down on record against debating financial reform three times in three days, the Republicans are ready to relent and let the debate begin. The Hill reports:
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Senate Republicans say that Democrats have made important concessions on a Wall Street reform bill, paving the way for debate to finally begin in the upper chamber.
McConnell said that Democrats have agreed to close “loopholes” in a provision setting up the fund that would have allowed federal officials to draw on taxpayer dollars to wind down a troubled institution.
If the pre-funded "orderly liquidation fund" is dropped, the financial reform bill will increase the deficit, not reduce it. According to This morning's Congress Daily ($), Banking Committee Chairman Sen. Christopher Dodd [D, CT] and Ranking Member Sen. Richard Shelby [R, AL] are close to an agreement on dropping the fund, which Republicans have been attacking as a "sluch fund" that "guarantees" future bailouts. In reality, the fund would be used to pay for liquidating (a.k.a. killing) failing mega-banks, not bailing them out.Read Full Article
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