Republicans Circulate a Draft of Their Own Financial Plan

Tuesday, April 27, 2010 at 5:27 pm

Damien Paletta at The Wall Street Journal has gotten a look at a 20-page Republican counter to Sen. Chris Dodd’s (D-Conn.) financial regulatory reform bill. The proposal is impossible to parse, as the reforms are complex and the details scarce, so take this with a grain of salt. But Paletta says the Republican proposal includes a “resolution authority” provision without a bank-funded “bailout fund,” much maligned by Republicans such as Sen. Mitch McConnell (Ky.). Instead, Republicans put the resolution process through the Federal Deposit Insurance Corporation, which would be required to recoup its costs before paying back counterparties.

The bill also reportedly limits the amount of funds the Federal Reserve can disburse in a financial emergency; creates a kind of consumer protection council; creates a supermonitor for financial stability; and gives regulators the authority to put swaps on exchanges.

The bill additionally contains a series of reforms of the government-sponsored entities Fannie Mae and Freddie Mac. Dodd and the Democrats plan to deal with housing finance in a separate comprehensive bill, though Republicans have said they want housing finance reforms in financial regulatory reform.

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Comment posted April 28, 2010 @ 1:10 am

I don't understand the beef with the bank funded fund to dismantle organizations that go bankrupt. It's like insurance for the taxpayers, paid for by the banks. In other words, if the banks screw up, we don't have to pay to prevent a economic disaster. The banks will have already set aside money for just such an event. It seems like a win for the taxpayer.

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