If you have been watching the conference committee deliberations on finance reform on C-SPAN, you know the debate has included a discussion of the ex-ante fund. This is the fund that had Republicans so animated in the House and Senate debate that they resorted to making stuff up to attack the concept. The concept is solid: when a big bank fails, the financial industry itself ought to pay for the cleanup and selling off the components of the failed entity. The House version of the Wall Street reform bill has a $150 billion fund -- pre-paid by the big banks -- that would cover the cost. The Senate bill does not and asks big banks to help defray the costs after-the-fact if a big bank fails.
I authored the House amendment that was adopted, and I am fighting for the House version in conference. The American taxpayer and the federal budget cannot afford the Senate version.
The Congressional Budget Office scored the two proposals and found the taxpayers would have a $20 billion liability under the Senate proposal, and that under "pay-go" rules, we would have to offset that spending in the budget somewhere else.
So, where would it be?
Raising taxes on hard-working men and women to pay for Wall Street's tab? I don't think so.
Spending cuts? That is clear too. What would Wall Street bankers and their lobbyists buy if we saved them the money and made taxpayers pay instead? The choice is between the frivolous and luxurious and the vital and essential.
Wall Street bankers could easily give up one of their martinis, one of their trips to the Riviera, one of their cars (it could be the one they keep at their country home), and a couple fewer trips to the spa or the plastic surgeon.
In exchange, we don't have to cut $20 billion for flak jackets for our troops, nutrition programs for children, rural health care services, and maintaining bridges and levees.
The choice is clear. And Sheila C. Bair, Chair of the Federal Insurance Deposit Corporation (FDIC) agrees with me. She wrote me the following:
As I have stated before, I believe an ex ante fund provides better protection for taxpayers than a system borrowing all funds from the Treasury Department when needed and then repaying the borrowings through after-the-fact industry assessments.
Just like a car owner and a home owner, I want the ones who are taking the risk to pay for their insurance when and if things fall apart. Pay it up front. Period.
I'm fighting for this to protect the taxpayers. I am fighting for a few other proposals I enumerated in a letter to conferees and in an appearance on CNBC last week. Since the deliberations are public on C-SPAN, we have a level of transparency in these deliberations that are unheard of on Capitol Hill. I hope you are paying attention and that you support my efforts to fight for the little guys and stand up to the Wall Street bankers.
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