Republican U.S. Senate candidate Dino Rossi has finally come out today in opposition to the Wall Street reform bill the senate is considering, and taking aim at U.S. Sen. Patty Murray,D-Wash., for supporting what he says is legislation that will allow for bank bailouts.
So is the claim that bailouts will continue under the legislation true?
Politifact says no. And the claim has been debunked for a few months now by them. Said Politifact when they analyzed the exact same claim from Republican U.S. Sen. Mitch McConnell:
It clearly states that the intention is to liquidate failing companies, not bail them out. To do that, it creates a fund with contributions from financial firms, not from taxpayer funds. We do not see any element of the bill that expressly permits ongoing, “endless” outlays from the federal treasury. … Nothing in the bill “guarantees” future bailouts of Wall Street banks. We rate his statement False.
But The New York Times has an in-depth piece out that shows the issue is far more complicated, just as is our economic system in the first place.
You’ll need to check it out to get the full picture. But, basically, the gist is that while there is specific language barring bailouts, there is flexibility in terms of how a company would be liquidated. The legislation is specifically intended to show the markets that the government won’t act as a backstop against failures, and that one portion of the bill that might allow for what some could perceive as a “bailout” is written in a way that it might never be used. But, they caution, no financial crisis is the same, and that there’s no way of knowing how the legislation might impact a future financial issue without it being enacted.
Said Steven M. Davidoff:
Still, eliminating regulation by deal in a financial crisis is impossible. This is because we simply do not know the nature of the next crisis and the law cannot account for all future possibilities. And sometimes frankly, this deal-making may result in better outcomes.
This part of the bill makes inevitable compromises that will leave some unsatisfied. The bill may not end all bailouts, but it is still a significant improvement toward more effectively regulating the financial system.