WASHINGTON BUREAU — The battle over the shape of financial services reform legislation is heating up as the Senate version of the bill edges closer to the floor.
“I am actually confident that we can work out an effective bipartisan package that assures that we never have ‘too big to fail’ again,” President Obama said today at a White House meeting with the House and Senate leaders from both parties.
Earlier, Senate Minority Leader Mitch McConnell, R-Ky., had contended that the Senate version of the bill effectively “authorizes permanent bailouts” through a number of provisions, including one provision that calls for the government to use fees from large financial institutions to create a $50 billion bailout fund.
Sen. Christopher Dodd, D-Conn., chairman of the Senate Banking, Housing and Urban Affairs Committee, who oversaw the development of the bill, has said that he will start to take the steps needed to get his bill to the Senate floor “in the next several days.”
“Our bill extends oversight to dangerous nonbank financial companies like AIG that could pose a risk to our financial stability,” Dodd said today on the Senate floor.
The bill also “eliminates the Federal Reserve’s ability to prop up individual institutions using its 13(3) authority, another way to stop banks from thinking they could be bailed out,” Dodd said. “”The Fed’s lending authority is strictly restricted, not expanded as some have claimed.
The bill “bill sets up a predictable, orderly, and safe process for shutting down dangerous Wall Street firms that fail without endangering the entire economy,” Dodd said.
The biggest Wall Street firms will have to put the money in the $50 billion fund, and “any shortfall will be made up by the largest and riskiest financial firms,” Dodd said.
Observers have suggested that MetLife Inc., New York (NYSE:MET) – a bank holding company with $425 billion in assets – might be one of the companies that would have to contribute to the bailout fund.
In other financial services legislation news:
- The Senate Agriculture Committee is considering a measure that would narrow an exemption that swaps traders could use to keep from having to conduct transactions through a major exchange.