One sign that the White House financial reform is less potent than its advertising claims is that it doesn’t even attempt to reform the two companies at the heart of the housing mania and panic, Fannie Mae and Freddie Mac. So we’re glad to see that yesterday GOP Senators John McCain, Richard Shelby and Judd Gregg introduced a Fan and Fred reform amendment that will let Democrats show if they’re serious about reducing reckless lending and taxpayer risk.
WSJ: Dodd Agrees to Remove Unlimited Bailout-Takeover Fund from Financial Bill
By GREG HITT And DAMIAN PALETTA
Senate Minority Leader Mitch McConnell (R., Ky.) said the logjam broke after Republicans were given “assurances” by Democrats that “changes will be made to end taxpayer bailouts and the dangerous notion that certain financial institutions are too big to fail.”
Connecticut Sen. Christopher Dodd, the Senate Banking Chairman, and Alabama Sen. Richard Shelby, the panel’s senior Republican, have been meeting for days, ultimately agreeing to jointly support new powers for the government to break up a failing financial company.
Mr. Dodd agreed Wednesday to drop the $50 billion fund designed to pay for the liquidation of a failed firm. That money would have been collected in advance from large financial firms. Republicans had criticized the fund, saying it amounted to a permanent bailout fund that would weaken market discipline.
McConnell: Key Agreement Reached on Closing Bailout Loopholes
WASHINGTON, DC – U.S. Senate Republican Leader Mitch McConnell made the following statement Wednesday regarding assurances from Chairman Dodd on bailout loopholes in the Wall Street bill:
“I appreciate the efforts of Sen. Shelby to work toward a bipartisan solution on an issue that will have an impact on nearly every American. The time afforded by my Republican colleagues and Sen. Ben Nelson was instrumental in gaining assurances from the Chairman that changes will be made to end taxpayer bailouts and the dangerous notion that certain financial institutions are too big to fail.
“Unfortunately, Sen. Shelby believes that continued talks on a number of provisions affecting Main Street will not bring the negotiators any closer to an agreement. Now that those bipartisan negotiations have ended, it is my hope that the majority’s avowed interest in improving this legislation on the Senate floor is genuine and the partisan gamesmanship is over. I remain deeply troubled by a number of provisions in this bill and will work aggressively in the days ahead to ensure that the majority does not use our mutual interest in regulating Wall Street to extend the federal government’s unwanted hand into Main Street.”
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