Key senators agree on too big to fail deal

[Elmore Furth]

Source: CNN

WASHINGTON (CNNMoney.com) -- Top senators on the banking panel released the details of a bipartisan deal on how to unwind big financial firms that are considered too big to fail.

Sen. Christopher Dodd, D-Conn., said he's finished making changes to an amendment to the Wall Street reform bill that concerned Republicans like Sen. Richard Shelby, R-Ala.

Dodd and Shelby reached an agreement in principle last week, and now the Senate will vote on this amendment later this afternoon.

Among the more significant changes, Democrats are officially dropping the tax on banks that would have funded a $50 billion pot of money that regulators could tap to help take down failing banks. Now the bill stipulates that banks will be taxed to pay unwinding banks after a collapse.



Read more: http://money.cnn.com/2010/05/05/news/economy/Senate_Wall_Street_Reform/

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C-SPAN had the banner headline on its coverage that "SENATE VOTES TO GIVE FDIC POWER TO LIQUIDATE LARGE FINANCIAL FIRMS"

By The Associated Press
WASHINGTON (AP) -- The Senate has specified that taxpayers would sustain no losses as a result of future failures by large financial firms.

The Senate on Wednesday voted 96-1 to assert that taxpayer money would not be used to prevent a company from failing.

The overall financial regulation bill could still require taxpayers to provide money up front to liquidate a firm. But the legislation also requires the government to recoup those costs through the sale of assets and by forcing shareholders and creditors to take losses.

But in their deal, Senate Banking Committee Chairman Christopher Dodd, D-Conn., and the committee's top Republican, Sen. Richard Shelby of Alabama, would require the FDIC to recoup those costs from the sale of a failing firm's assets, forcing losses on shareholders and creditors, including counterparties to the firm's financial contracts. Additional costs could be paid by assessing a fee on large banks, but only as a last resort.



Senate vote: If firm fails, no loss to taxpayers

[Roland99]

1. Caving to profits over safety.....again.

[high density]

2. After a collapse?

That makes no sense. It would be better to build up this fund during a boom time instead of during a time like 2008. The FDIC has been earning fees in advance for ages.

[lamp_shade]

3. It passed 93-5

[Mr. Sparkle]

4. Thats just like republicans, as a rule, they dont save for a rainy day.

It is against their nature. What happens if the other banks are struggling when a big one collapses, thereby putting pressure on these banks and possibly makes another one collapse. The only solution would be another government bailout.

It would be better to have a fund built up by the banks themselves; the 50 billion fund was a good idea, if somewhat a bit small.

[Cal Carpenter]

9. How can a 93-5 vote be 'just like republicans'?

How many times do we have to see shit like this before it sinks in that it's 'just like Democrats' too?

They're not even trying to make it look like they're fighting.

:(

eta: I may be misunderstanding what's going on, I'm trying to skim these articles and google for more details. So I apologize if I am totally off-base on this but it doesn't sound good to me.

[Mr. Sparkle]

10. The republicans lobbied to get rid of the 50 Billion bailout fund in order for them to support

the bill. Like it or not, we need a few republicans to pass the bill, and when their leadership developed it into an issue, the democratic majority had to swallow it. If we had a leadership who were good at political theater, than maybe we could have kept the fund by bring undue attention to what the republicans are doing and force a public climb down.

You are right in that the democrats did not fight hard enough to keep it, the administration showed early on , to get support for the bill, that they would drop it.

So when the republicans go around shouting that they don't want another government bailout, removal of this fund makes it more than likely that it is exactly what will happen, with another collapse.

[AlinPA]

5. When the final bill is ready for vote, the republicans will filibuster. They can't allow

any legislation to be passed that Obama may support.

[defendandprotect]

6. They should be broken up and taxed === now !!

[No Elephants]

7. Three words. Professor Elizabeth Warren.

[Robbien]

8. What a crock. It is not a too big to fail bill. It is a taxpayer funds banksters bill

Senate vote: if a firm fails, ignore it and taxpayers pick up the tab while banksters get bonuses.