WASHINGTON, DC – U.S. Senate Republican Leader Mitch McConnell made the following remarks on the Senate floor Tuesday regarding financial regulation reform:
“A lot of smart people have thought about how to prevent a repeat of the kind of financial crisis we saw in the fall of 2008. We’ve heard plenty of ideas. But if there’s one thing Americans agree on when it comes to financial reform, it’s this: never again should taxpayers be expected to bail out Wall Street from its own mistakes. We cannot allow endless taxpayer-funded bailouts for big Wall Street banks. And that’s why we must not pass the financial reform bill that’s about to hit the floor. The fact is, this bill wouldn’t solve the problems that led to the financial crisis. It would make them worse.
“The American people have been telling us for nearly two years that any solution must do one thing — it must put an end to taxpayer funded bailouts for Wall Street banks. This bill not only allows for taxpayer-funded bailouts of Wall Street banks; it institutionalizes them.
“The bill gives the Federal Reserve enhanced emergency lending authority that is far too open to abuse. It also gives the Federal Deposit Insurance Corp and the Treasury Department broad authority over troubled financial institutions without requiring them to assume real responsibility for their mistakes. In other words, it gives the government a new backdoor mechanism for propping up failing or failed institutions.
“A new $50 billion fund would also be set up as a backstop for financial emergencies. But no one honestly thinks $50 billion would be enough to cover the kind of crises we’re talking about. During the last crisis, AIG alone received more than three times that from the taxpayers. Moreover, the mere existence of this fund will ensure that it gets used. And once it’s used up, taxpayers will be asked to cover the balance. This is precisely the wrong approach.
“Far from protecting consumers from Wall Street excess, this bill would provide endless protection for the biggest banks on Wall Street. It also directs the Fed to oversee 35 to 50 of the biggest firms, replicating on an even larger scale the same distortions that plagued the housing market and helped trigger a massive bubble we’ll be suffering from for years. If you thought Fannie and Freddie were dangerous, how about 35 to 50 of them?
“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.”