Evidently some republicans have a problem with the proposal to implement a "too big to fail" tax on financial giants, which would build a fund that would be tapped in the event that a large financial institution fails and needs to be unwound.
This fund (officially known as the Systemic Dissolution Fund) is meant to ensure that taxpayers stay out of the bailout business.
Republicans though, made it clear on the House floor that their opposition will be based on calling the fund "permanent TARP" and a "permanent bailout fund," while falsely claiming that taxpayers and non-financial companies will have to pay for it. Watch a compilation:
Unless the "schoolteachers in Mesquite, Texas" that Rep. Jeb Hensarling (R-TX) referenced have more than $50 billion in assets and have taken to hawking credit default swaps in the cafeteria, this tax will not affect them. And as far as the levy hitting "small businesses," unless Goldman Sachs is now a small business in the eyes of the GOP, there is no truth to this.
Instead of enshrining bailouts, the bill quite clearly stipulates on page 397 that the dissolution fund can only be used "to facilitate and provide for the orderly and complete dissolution of any failed financial company or companies that pose a systemic threat to the financial markets or economy."
As Rep. Ed Perlmutter (D-CO) said on the floor in response to the GOP's rhetoric, "there is no bailout. As much as my friends on the other side of the aisle would like to be on message and continue to repeat that, there is no bailout." Though they dress it up in populist language, the GOP is endorsing the regulatory approach that led to AIG's repeated infusions of taxpayer money and the market shock that was felt in the wake of Lehman Brothers' collapse. But what more should we expect from the party that is huddling with financial services lobbyists to decide how to best kill regulatory reform?
Open Congress Summary
This is comprehensive legislation to overhaul regulations in the financial sector. It would establish a new Consumer Financial Protection Agency to regulate products like home mortgages, car loans and credit cards, give the Treasury Department new authority to place non-bank financial firms, like insurance companies into receivership and regulate the over-the-counter derivatives market.
A two-page summary from the House Financial Services Committee can be downloaded here.
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