Senate Banking Committee Chairman Christopher Dodd said he and Republican Senator Richard Shelby have agreed “conceptually” on changes to the financial- overhaul bill aimed at preventing bailouts of Wall Street firms.
The deal would eliminate a proposed industry-paid $50 billion fund to cover the government’s costs of liquidating a failing financial firm, Dodd said today in an interview. Republicans said the fund would encourage bailouts rather than prevent them.
Dodd said the compromise with Shelby of Alabama, along with an amendment by California Democrat Barbara Boxer that would prohibit spending taxpayer funds to keep failing firms in business, “takes that issue completely off the table.”
“I’m satisfied, as I believe my colleague from Alabama is, that we’ve reached an agreement on the too-big-to-fail provisions,” said Dodd, a Connecticut Democrat.
The Senate is debating Dodd’s legislation to redesign rules governing Wall Street, intended to prevent a repeat of the 2008 financial crisis that forced the U.S. to extend $700 billion in taxpayer aid to companies including Citigroup Inc. and Bank of America Corp.
Senate Majority Leader Harry Reid accused Republicans of obstructing consideration of the bill, saying they were insisting on considering the Shelby-Dodd changes ahead of other amendments.
“They won’t even let us set amendments aside and move to amendments that are agreed upon,” Reid, a Nevada Democrat, said today from the Senate floor.
The bill is based on a proposal by President Barack Obama and is similar to legislation the U.S. House of Representatives approved in December.
The Dodd-Shelby agreement would apply to a section of the bill that would give the government authority to liquidate large failing financial firms whose collapse would threaten the economy. The two senators have agreed to replace the proposed pre-funded $50 billion reserve with language that would require regulators to impose fees on the financial industry to recoup costs for unwinding a company after a collapse, Dodd said today.
“You come to the same result, it’s just a different approach,” Dodd said. “If the optics of that raised concerns with them, my view is let’s deal with too-big-to-fail and get it off the table.”
The language of the deal is being finished, Dodd said. Republicans want to see the language before moving to consider other amendments, he said.