WASHINGTONThe chairman of the Senate Banking, Housing and Urban Affairs Committee said Wednesday that he and the panel’s top Republican have reached agreement on provisions in his financial services regulatory reform bill that would allow an orderly liquidation of failing financial services companies.
In a statement, Sen. Chris Dodd, D-Conn., said the agreement with Sen. Richard Shelby, R-Ala., would end bailouts of financial services firms that failed.
Among changes in the legislation on which the two have formally agreed is dropping a prefunded $50 billion resolution fund to deal with failing financial institutions. Republicans opposed to the provision led a filibuster that prevented the bill from reaching the Senate floor for several days last week.
“Because, whether they pay in advance or after the fact, these costs will be paid by Wall Street and not taxpayers, I have no objection to dropping that provision,” Sen. Dodd said in the statement.
In addition, “creditors will be required to pay back the government any amounts they received above what they would have gotten in liquidation,” Sen. Dodd said. “Those who directly benefited from the orderly liquidation will be the first to pay back the government at a premium rate.”
Congress would have to approve any federal debt guarantees of financial institutions, and regulators “can ban culpable management and directors of failed firms from working in the financial sector,” Sen. Dodd said. “With this agreement, there can be no doubt that this Senate is unified in its commitment to end taxpayer-funded bailouts.”