Republicans Give Up the Game
At the end of last week, the Obama administration reportedly told Senate Democrats to drop the $50 billion liquidation fund — often referred to as a “bailout fund” — from the financial regulation bill as a concession to Republicans. Senate Democrats broached the deal with Republican leadership. They refused.
Still, yesterday, Senate Minority Leader Mitch McConnell (Ky.) made the “bailout fund” the centerpiece of his argument against financial regulation reform on CNN’s State of the Union with Candy Crowley.
Of course, the “bailout fund” is no “bailout fund.” The idea is that banks would fund a $50 billion pool; were any to get into trouble, regulators would fire every member of management, wipe out shareholders, split the company up and sell the pieces, and tap the $50 billion fund to pay for the process and ensure the orderly dissolution of the firm. Companies like Citigroup were given bailouts during the crisis. This would be an execution (or, as Sen. Mark Warner (D-Va.) likes to say, a “death panel“).
Still, McConnell has made the fund a central talking point. The political calculation is clear: At least for now, Republicans believe that they are better off arguing the bill is not good enough rather than voting for reform, no matter how cynical and hypocritical it might seem.