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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.

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“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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Washington, D.C. – U.S. Senator Richard Shelby (R-Ala.), today made the following statement regarding financial regulatory reform negotiations.

“I thank Leader McConnell and my Republican colleagues for providing an opportunity for my negotiations with Chairman Dodd to run their course. I believe we owed the American people our best effort to make whatever changes we could to this incredibly complex piece of legislation because it will have wide ranging implications for our economy. Chairman Dodd has assured me that he will address a number of concerns I have expressed with respect to ending bailouts. We have been unable, however, to make any meaningful progress on other important components of the legislation. It is now my belief that further negotiations will not produce additional results.

“This bill still contains a sprawling new consumer protection bureau that will find and force its way into facets of our economy that had nothing to do with the housing crisis. This massive new bureaucracy would have unchecked authority to regulate whatever it wants, whenever it wants, however it wants. I am aware of no other arm of the federal government this powerful, yet so unaccountable. In my negotiations with Chairman Dodd, I have consistently supported strengthening consumer protections. I have also advocated for a sensible and meaningful role for safety and soundness regulators in this new agency’s operations. Unfortunately, despite my demonstrated willingness to propose compromise solutions, this sensible step has proved to be a bridge too far.

“Also included in this legislation are critical provisions relating to derivatives. These provisions, which Democrats developed on their own behind closed doors, were only very recently inserted into the bill. In fact, I was not provided the opportunity to share my views on a single aspect of the derivatives provision. While I firmly believe we must end the casino-like atmosphere on Wall Street, I also believe we must protect Main Street’s ability to create jobs and grow the economy. In my judgment, the provisions as currently drafted would have far-reaching and devastating effects on these businesses and our economy, increasing the cost of nearly every product we use and negatively impacting job growth.

“Although I am disappointed that we have been unable to reach an agreement on across-the-board improvements to this legislation, I appreciate Chairman Dodd’s assurance that my concerns relating to ending bailouts will be included in his bill. I take him at his word. While these changes are significant and meaningful, they are not sufficient to garner my support for moving this bill to the Senate floor. Now that my negotiations with Chairman Dodd have reached an impasse, I thank my Republican colleagues for their support and defer to their individual judgments on whether the Senate begins a floor debate on this bill.”

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The American people are tired of the borrowing, spending and bailouts that have been advanced by the administrations of both political parties. It’s time to end the era of bailouts and reaffirm our belief that the freedom to succeed must include the freedom to fail.

Unfortunately, under the guise of financial services reform, congressional Democrats are trying to pass a permanent bailout bill for the financial services industry, ensuring that American taxpayers would be on the hook to bail out reckless Wall Street firms well into the future. Despite claims to the contrary, even some Democrats admit that it would be a permanent bailout.

Don’t just take my word for it. California Congressman Brad Sherman, a senior member of the House Financial Services Committee, told Politico recently that the financial reform bill proposed by Senate Democrat Chris Dodd “has unlimited executive bailout authority. . .. The bill contains permanent, bailout authority.”

Specifically, the Senate bill provides for a $50 billion resolution fund, created with taxes on financial institutions. Consumers, including families, small businesses and family farms, would pay that $50 billion through higher costs for credit products. Then, regulators would be able to use this fund to pay off the creditors of those failing firms, similar to the backdoor bailout of Goldman Sachs with money the Fed gave to AIG.

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WASHINGTON — Senate Republicans on Thursday blocked an effort by Democrats to start debate on legislation to tighten regulation of the nation’s financial system, and the two sides traded bitter accusations about who was standing in the way of a bipartisan agreement.

The majority leader, Harry Reid of Nevada, asked Republicans to agree to begin debating the measure, which would impose a sweeping regulatory framework on Wall Street and big financial institutions. But the Republican leader, Senator Mitch McConnell of Kentucky, objected, saying Democrats were pre-empting negotiations to reach a deal.

In response, Mr. Reid said he would call the first procedural vote on Monday in an effort to stop the Republican filibuster. That vote could test Republican resolve to oppose the measure in an election year, amid public dismay over big Wall Street profits and bonuses even as unemployment remains high.

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“In the fall of 2008, I reluctantly voted for a bill that sent taxpayer money to Wall Street banks that should have paid for their own mistakes. We were told it was needed to avert a global calamity. So I did it. And then I went back to my constituents and vowed: ‘never again’.

“Never again should taxpayers be on the hook for recklessness on Wall Street. And no financial institution should be considered too big to fail.

“So when the financial regulatory bill the Majority was about to bring to the floor last week still contained a number of loopholes allowing for future bailouts, I raised the alarm. I wasn’t about to take Democrat assurances that this bill protected taxpayers. I wanted them to prove it.

“And that’s really what this debate is all about: it’s about proving to my constituents and to the rest of the country that we actually do what we say we’re going to do around here because if you haven’t noticed, there’s a serious trust deficit out there. Public confidence in government is at one of the lowest points in a half century. Nearly eight in 10 Americans now say they don’t trust the government and have little faith that it can solve America’s ills.

“And it’s no wonder. Over the past year, the American people have been told again and again that government was doing one thing when it was doing another.

“Just think about some of the things Americans have been told.

“As a senator, the current President railed against deficits and debt. He said America has a debt problem and that it was a failure of leadership not to address it. Yet last year his administration released a budget that doubles the debt in five years and triples it in 10. The debt has increased over $2 trillion since he took office. And in February, the federal government ran the largest monthly deficit in history.

“How about the bailouts? The President has said he didn’t come into office so he could take over companies. But whether or not that’s the case, Americans can’t help but notice that some people did better than others. When it came to bailing out the car companies, the unions fared a lot better than anybody else.

“What about jobs? Last year, the White House rushed a Stimulus bill through Congress because it said we needed it to create jobs. They said we needed to borrow the trillion dollars it cost the taxpayer to keep unemployment from rising above 8%. Well, more than a year later unemployment is hovering around 10%. All told, we’ve lost nearly 4 million jobs since the President was sworn in.

“Then there was healthcare. I’ll leave aside the substance for a moment and just talk about the process. Americans were told the process would be completely transparent. All the negotiations would be broadcast live on C-SPAN. Instead, they got a partisan backroom deal that was rammed through Congress during a blizzard on Christmas Eve.

“This is the context for the debate we’re in. So it should come as no surprise to anyone that when we’re talking about a giant regulatory reform bill, the American people aren’t all that inclined to take our word for it when we say it doesn’t allow for bailouts, or that it won’t kill jobs, or that it won’t enable the administration to pick winners or losers. They’ve heard all that before. And they’ve been burned. This time, they want us to prove it.

“The first thing they want us to prove is that this bill ends bailouts. That was the one thing this bill was supposed to do, and if this bill didn’t do anything else but that, a lot of people would be satisfied. The administration has said it wants to end bailouts. Prove it.

“Some of us have pointed out our concerns that this bill would give the administration the authority to use taxpayer funds to support financial institutions at a time of crisis. Yes, the bill says taxpayers get the money back later. But that sounds awfully familiar. Isn’t that exactly what we did with the first bailout fund — a bailout fund Americans were promised would be repaid, but which Democrats are now trying to raid in order to pay for everything else under the sun?

“If a future administration thinks there’s a crisis that requires using taxpayer funds, then they should have to get permission from the taxpayers first. It isn’t enough for someone in the administration to say it’s so. They need to come to Congress before they write the check. If this bill isn’t like the first bailout, prove it.

“As I said, we’ve seen in other bailouts that some are treated better than others. This bill appears to enable the same thing by allowing the FDIC to treat creditors with equal claims differently. If the proponents of this bill think this bill does not allow the administration to pick winners and losers, they need to prove it.

“This bill also contains a number of provisions that threaten the ability of small businesses to hire new workers. Other provisions would send jobs overseas. And just this morning, the Wall Street Journal pointed out a provision that would put new regulatory burdens on start-up businesses that would make it harder for them to get off the ground. If this bill doesn’t create burdensome new regulations that would make it harder for Americans to dig themselves out of this recession, prove it.

“Every indication is that the Chairman and the Ranking Member are making progress in their discussions, and that this bill will have needed improvements. And that’s good. Some of the concerns I’ve just raised are among the topics being discussed.

“But in the end, Americans aren’t rooting for some deal. They’re asking us for clarity. They’re asking us not for verbal assurances but for concrete proof because at the end of the day, I need to be able to look my constituents in the eye and prove to them that this bill does not allow for any bailouts. I need to prove to them that this bill doesn’t treat some favored groups better than others. I need to prove to them that this strengthens the economy, that it doesn’t make it worse.

“People need to be convinced that we’re doing what we say we’re doing. This time they want proof. And frankly, I don’t blame them.”

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