After Meeting With Bankers, Sen. McConnell Attacks Wall Street Reform

April 13, 2010 12:53 pm ET

A day after FoxBusiness.com reported that Sen. Mitch McConnell met with 25 Wall Street executives and hedge fund managers, McConnell took to the Senate floor to spout false attacks on Democratic efforts to hold those bankers accountable.

After Meeting With Bankers, Sen. McConnell Attacks Wall Street Reform

FoxBusiness.com on April 12, 2010:

About 25 Wall Street executives, many of them hedge fund managers, sat down for a private meeting Thursday afternoon with two of the most powerful Republican lawmakers in Congress: Senate minority leader Mitch McConnell of Kentucky, and John Cornyn, the senior senator from Texas who runs the National Republican Senatorial Committee, one of the primary fundraising arms of the Republican Party. [FoxBusiness.com, 4/12/10; emphasis added]

Sen. Mitch McConnell On April 13, 2010:

Everybody agrees on the need to protect taxpayers from being on the hook for future Wall Street bailouts. This bill would all but guarantee that the pattern continues. We need to end the worst abuses on Wall Street without forcing the taxpayer to pick up the tab. That's what Republicans are fighting for in this debate. The taxpayers have paid a high enough price already. We're not going to expose them to even more pain down the road.

The way to solve this problem is to let the people who make the mistakes pay for them. We won't solve this problem until the biggest banks are allowed to fail. [McConnell Release, 4/13/10]

Financial Reform Ends The Bailout Culture, Brings Accountability And Transparency To Wall Street

Contrary to McConnell's remarks, the biggest banks are allowed to fail. The bill creates an "Orderly Liquidation Authority" that does not bail firms out, but safely dismantles "any failed financial company" that threatens the entire economy.  This dissolution fund is financed NOT by taxpayers, but by fees levied on financial companies.

The Senate's Restoring American Financial Stability Act Ends The Risky Bailout Culture, Liquidates Failed Institutions.  According to Section 204 of the Restoring American Financial Stability Act of 2010:

[Restoring American Financial Stability Act of 2010, accessed 4/7/10]

WSJ: Senate Bill "Would Make A Government Bailout Virtually Impossible." As reported by the Wall Street Journal: "A spokeswoman for the Connecticut Democrat said Friday he would change a provision that would have allowed the Federal Reserve to use emergency powers to lend to an individual 'financial market utility.' Only payment and clearing firms deemed 'systemically important' by a proposed council of regulators would have been eligible.... The change Mr. Dodd has agreed to would make a government bailout virtually impossible, though the government would be able to seize and dismantle failing firms." [Wall Street Journal via Factiva, 3/19/10]

Kudlow: "Dodd's Financial-Regulation Proposal Raises The Possibility Of Substantial Progress On The Road To Ending 'Too Big To Fail' (TBTF) And Bailout Nation." In a column written for RealClearMarkets, Larry Kudlow wrote, "Sen. Chris Dodd's financial-regulation proposal raises the possibility of substantial progress on the road to ending 'too big to fail' (TBTF) and bailout nation for banks and other financial institutions... First, under the Dodd scheme, large complex companies will have to submit plans for rapid and orderly shutdowns should they go under. These are called 'funeral plans.' Then, in terms of these orderly shutdowns, the bill would create an 'orderly liquidation mechanism for the FDIC to unwind failing systemically significant financial companies. Shareholders and unsecured creditors will bear losses and management will be removed.' Good." [Kudlow, RealClearMarkets, 3/16/10]

Washington Post: "The Bill Provides A Way To Rein In The Risks They Take With That Money, And Taxpayers Won't Be On The Hook If They Nevertheless Collapse." In an editorial written after the Senate released its plan to reform the financial system, the Washington Post wrote, "Like the House bill, it would authorize a council of regulators to name systemically risky institutions, limit their leverage and require them to pay into a $50 billion resolution fund that would deal with a big firm's collapse. To be sure, listing 'too big to fail' institutions only encourages the market to offer them artificially easy funding. But at least the bill provides a way to rein in the risks they take with that money, and taxpayers won't be on the hook if they nevertheless collapse." [Washington Post, 3/18/10]

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