May 3rd, 2010, Fairfax, VA—Americans for Limited Government President Bill Wilson today dismissed an amendment offered by Senator Barbara Boxer (D-CA) to the financial takeover bill as “doing nothing to prevent future bailouts, and instead will guarantee that they occur.”
“Senate Democrats need to stop lying to the American people about what is in this legislation. The Boxer amendment will do nothing to prevent unlimited bailouts to creditors that will ultimately be paid for by the American people,” said Wilson.
“Senator’s Boxer’s amendment is being presented as if it removes the unlimited bailout authority from the Dodd bill, but it leaves in place the ability of the government to put a company into receivership, fully compensate its creditors and recapitalize it, all with the bailout fund, which the amendment will not remove from the bill,” Wilson explained.
“Then, the bailed-out company, under a new name, could be sold back to the creditors who were already bailed out from the fund in the first place,” Wilson added. “That’s a bailout.”
The Boxer amendment states that any company put into receivership by the Federal Deposit Insurance Corporation (FDIC) must be “liquidated,” but in an oped published this morning, Wilson wrote, “the ‘orderly liquidation fund’ is so broadly established that it even allows the FDIC to operate any company while in receivership, including all staffing decisions and the composition of the board of directors.”
The oped continues, “The FDIC could [also] reorganize the company as a ‘bridge financial company,’ whose board of directors is appointed by the FDIC, and the ownership of the company transferred to the new company by the FDIC. The new company, at the discretion of the FDIC, can then issue capital stock and securities.”
Wrote Wilson, “That is a lot more like a Chapter 11 reorganization of company than a Chapter 7 liquidation, except that it can be completely financed by the unlimited fund. That’s because it’s a bailout.”
Get full story here.
