Today in Washington, D.C. - April 19, 2010 - Treas. Dept. Agrees With Republicans On Dodd Bill Bailout Fund Provision

The Senate reconvened a few minutes ago (at 2 PM) and will resume consideration of the nomination of Lael Brainard to be an undersecretary in the Treasury Department. At 5:30 PM, the Senate will vote on a motion to invoke cloture on the nomination. Last week, Senate Majority Leader filed cloture on five nominees: Brainard, Marisa Demeo to be a judge at the Superior Court of the District of Columbia, Christopher Schroeder to be an Assistant Attorney General, Thomas Vanaskie to the 3rd Circuit Court of Appeals, and Denny Chin to the 2nd Circuit Court of Appeals. While I agree with need judges on the bench, it is amazing how Senate Majority Reid held up President Bush nominees and now slavishly brings everyone of President Obama's nominees forward.

As reported last week, Senate Republican Leader Mitch McConnell went to the Senate floor to explain Republican concerns with the Democrats’ financial regulation bill that was passed out of the Banking Committee on a partisan basis. He said, “We cannot allow endless taxpayer-funded bailouts for big Wall Street banks. And that’s why we must not pass the financial reform bill that’s about to hit the floor. The American people have been telling us for nearly two years that any solution must do one thing — it must put an end to taxpayer funded bailouts for Wall Street banks. This bill not only allows for taxpayer-funded bailouts of Wall Street banks; it institutionalizes them.” Later in the day, Sen. McConnell said to reporters that Democrats should come back to the negotiating table: “[L]et’s get it right and do it on a bipartisan basis . . . . We're willing to meet them in the middle. Senator Shelby's been talking to people for a long time. It's time to get back to genuine bipartisan discussions”

But instead of offering bipartisan negotiations to fix Senate Banking Committee Chairman Chris Dodd's 1408 paged flawed bill, Sen. McConnell’s concerns were met with a week of attacks by Democrats and the White House essentially calling him a liar. Politico reported, “Dodd lashed out at Republicans for characterizing the bill as perpetuating endless taxpayer bailouts of failing financial firms. He said critics of the bill are spreading ‘outright falsehoods’ that are ‘now being repeated by people who should know better and frankly do know better.’ Democrats accused Sen. McConnell of repeating baseless “talking points.” A Democrat party source told The Hill on Thursday, “McConnell's arguments that the Democrat's plan for Wall Street reform will perpetuate bailouts is pure fantasy cooked up by Frank Luntz in a right wing focus group - and bears no reality to the legislation or Mitch McConnell and the Republican Party's longtime efforts to shill for Wall Street and its lobbyists.”

On Friday, noted economist Larry Lindsey wrote a memo to House Republican Leader John Boehner (R-OH) on President Obama’s financial bailout bill. Since media outlets have reported that President Obama has requested that the $50 billion bailout fund from Senator Dodd’s bill be removed, it is important to note that this bailout fund is just one of numerous unacceptable bailout provisions in the bills being pushed by House and Senate Democrats. Among other bailout provisions, Lindsey notes in the memo that the Democrats’ bill also gives (1) the Treasury and the FDIC authority to grant an unlimited number of loan guarantees to systemically risky institutions; and (2) the Fed the authority to fund any “program” to assist these institutions accepting as collateral anything it deems appropriate.

Boehner also noted that while a new national survey showing that "nearly eight in 10 Americans say they don’t trust the federal government, Washington Democrats are getting ready to force through Congress a permanent bailout bill that establishes an unelected council of federal regulators with the power to seize any U.S. business and do with it as they see fit.

"The permanent Chris Dodd (D CT) bailout creates a Financial Stability Oversight Council (FSOC) made up of federal regulators – including representatives from the Treasury Department, the Federal Reserve, the CFTC, FDIC, and the SEC. In other words: the government bureaucracies asleep at the switch the last time around. This clique of regulators could – by a 2/3 vote – deem any firm (financial or non-financial) 'systemically significant,' which is merely jargon for other jargon: 'too big to fail.'"

Boehner added, "Once these firms are deemed ‘systemically significant,' they will be seen as safer firms to lend to than small firms that are not government-backed. The result will be a permanent market distortion, favoring large companies over small ones. This will hurt small businesses and small banks at the worst possible time for our economy."

And White House Spokeswoman Jen Psaki wrote last week, “Opponents of reform are protecting the big banks at the expense of American families -- so they’re going to do whatever they can to keep the present system in place and leave the American taxpayer with the bill. One false criticism we’re hearing is this: that the Senate bill will allow endless taxpayer-funded bailouts of financial firms. What they won’t tell you is that they are taking their marching orders from a partisan political consultant who has told them that the best way to oppose real reform is to link it to the bank bailouts. . . . Here are the facts: this bill does the exact opposite of what these critics say it does.”

Yet on Friday, senior officials at the Treasury Department requested that a $50 billion bailout fund be removed from the bill, one of the key problems with the bill that Sen. McConnell was pointing to. The AP reported, “In the face of stiff GOP opposition, Obama administration officials want Senate Democrats to purge a $50 billion fund for dismantling "too big to fail" banks from legislation that aims to protect against a new financial crisis. Republicans contend the provision would simply continue government bailouts of Wall Street.”

Around the same time this was happening, though, President Barack Obama was recording his weekly address, where he directly attacked Sen. McConnell for opposing this provision: “Just the other day, in fact, the Leader of the Senate Republicans and the Chair of the Republican Senate campaign committee met with two dozen top Wall Street executives to talk about how to block progress on this issue. Lo and behold, when he returned to Washington, the Senate Republican Leader came out against the common-sense reforms we’ve proposed. In doing so, he made the cynical and deceptive assertion that reform would somehow enable future bailouts – when he knows that it would do just the opposite.” This is, of course, the same President Obama who told NBC’s Matt Lauer barely two weeks ago that “we can disagree without being disagreeable.”  Hypocrisy combined with a whole lot of prevarication reigns in the Obama Administration.

As one Senate staffer rightly noted, "The White House and Senate Democrats are welcome to attack Republicans for a week on each troublesome provision in the Dodd bill and then quietly ask for the policy to be changed on Friday, but it would probably be quicker and easier for all involved if they would simply return to bipartisan negotiations." As Sen. McConnell told CNN’s Candy Crowley on Sunday, “I think we need to get back to the table and get it fixed. Look, I don't know anybody in the Senate who thinks we ought not to pass a bill. The question is, what's it going to look like? We want to make sure that we don't set up a system whereby we empower the government to continue to do what it has been doing -- running banks, insurance companies, car companies.”

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Tags: Washington, D.C., US Senate, US House, bank bailout, Chris Dodd, bill, White House, Obama Administration, Treasury Department, republicans, democrats, John Boehner, Mitch McConnell
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