Bipartisan Senate Approval for Sen. Warner's Framework for Ending Taxpayer Bailouts of Wall Street Firms
~ 93-to-5 vote in support of ending bailouts, ‘too big to fail’ ~
May 05 2010
Contact: Kevin Hall (202-224-2023)
WASHINGTON, D.C. – The U.S. Senate voted 93-5 today to adopt provisions of the Wall Street reform bill that were crafted by U.S. Senator Mark R. Warner (D-VA) in partnership with Senator Bob Corker (R-TN) for the orderly liquidation of financial firms deemed “too big to fail,” and to prevent any future taxpayer-funded bailouts of large, interconnected firms that get into financial trouble.
“Last November, I tasked Senator Mark Warner of Virginia and Senator Bob Corker of Tennessee with producing an agreement on how to resolve failed companies,” Banking Committee Chair Senator Chris Dodd (D-CT) said today. “They did a tremendous job. The package they produced would create effective oversight for large firms and make these firms pay for the risks they pose to our country and to the economy. Their agreement put a mechanism in place to guarantee that when large firms fail, they fail. The management is fired, creditors and share holders take losses, the company is liquidated, and taxpayers aren’t on the hook.”
The amendment adopted today dropped a previous provision for a $50 billion fund to help pay for liquidation costs, collected from the financial industry. Instead, any costs incurred as the government winds down a firm would be recovered from the industry after the fact. It tightens restrictions on the Federal Reserve's emergency lending powers, providing authority to the Federal Deposit Insurance Corporation to use a credit line from the U.S. Department of Treasury to cover any costs of unwinding a failing firm. Any losses incurred by the FDIC would be recovered as the agency sells off the assets of the failed firm. Finally, regulators would be able to ban “culpable” management and directors of failed firms from working in the financial sector.
“I have never believed these complicated issues around resolution authority and the orderly liquidation of these troubled firms needed to be partisan, and I am pleased that my colleagues checked their ‘D’ and “R’ hats at the door today in supporting this amendment,” Senator Warner said. “Under this legislation, if a large, interconnected financial firm gets into trouble, it will have two choices: bankruptcy, or a death sentence as the company is put out of business.”
“I thank Senator Warner of Virginia,” Senator Dodd said in remarks on the Senate floor last week. “He is a relatively new member of this body and a new member of the committee, but I can't even begin to aptly characterize his contribution to this product. Since day one, he has been at every meeting, been involved in almost every conversation about this bill … His background, his experience, his knowledge made a wonderful contribution to this product.”