Saturday, April 17, 2010

New Financial Reform Bill Forces Banks to Clean Up Their Own Messes

by David Haynes - Common Sense America
We need to get straight on this financial reform bill before the back and forth really moves into full swing.  First, the bill does not represent another (or any other) taxpayer-funded bailouts for troubled banks.  Mitch McConnell has been decrying the bill as just "another bailout" for the big banks.  Well, at least so far, the legislation is no such thing.  

The bill provides for a $50 billion dollar fund (paid for by the private finance industry entities) to cover the costs of future financial catastrophes.  Taxpayer dollars will not contribute into this fund.  It will essentially be an insurance fund that banks will be forced to pay into so that the next time they need a bailout, they'll be drawing emergency monies from their own kitty instead of ours.  

Republicans challenge that $50 billion is not nearly enough given the $700 billion that was ponied up by taxpayers in late 2008 (TARP) but Deputy Treasury Secretary Neal Wolin pointed out that, "The legislation makes clear that if the $50 billion fund is insufficient, then the institutions themselves, the industry, will be assessed to make up the difference."

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