he just got BUTTSLAMMED!

*promote Blankfists favorite form of socialism: corporate socialism

Promoting this video back to the front page; last published Thursday, April 15th, 2010 9:13am PDT - promote requested by volumptuous.

When Sen. Mitch McConnell said that the Senate financial-regulation bill meant "endless taxpayer-funded bailouts for big Wall Street banks," he was, knowingly or not, taking aim at a policy that had been jointly developed by Sens. Mark Warner (D-Va.) (pictured above) and Bob Corker (R-Tenn.). The two lawmakers began collaborating last spring, when they started holding joint briefings on the financial crisis. Eventually, Sen. Chris Dodd tasked them with handling the problem of what happens when too-big-to-fail firms, well, fail. He tasked them, in other words, with handling the problem of endless bailouts.

After months of meetings, the two finalized an agreement in February. That's the "resolution authority" part of the bill, which begins in section 201. And in an interview in his office this morning, Warner was not too happy with McConnell's characterization of their work. "It appears that the Republican leader either doesn't understand or chooses not to understand the basic underlying premise of what this bill puts in place."

"Resolution," Warner continued, "will be so painful for any company. No rational management team would ever choose resolution. It means shareholders wiped out. Management wiped out. Your firm is going away. At least in bankruptcy, there was some chance that some of your equity would've been retained and you could come out in some form on the other side of the process. The resolution that Corker and I have tried to create means the death of the company. The institution is gone."

Another element of the Republican critique concerns the $50 billion "orderly liquidation fund" that the FDIC will raise by taxing the banks. The idea of this fund is to create holdover money so the bank doesn't collapse while regulators are trying to unwind it. Sen. Richard Shelby, the ranking Republican on the Banking Committee, called it a "slush fund" and said that “the mere existence of this fund will make it all too easy to choose a bailout over bankruptcy.”

"Again," says Warner, "it's either that they don't understand or they choose not to understand. There's nobody in the financial sector who believes this. They'd laugh at the proposition that $50 billion is enough to get you through the resolution process if a couple of firms go down. What we've heard time and again is that the challenge in a crisis is to buy enough time to keep the lights on for a few days till you get the FDIC in here. You could make it smaller. Corker and I spoke about $25 billion. But this is funded by the industry."

"And here's the hypocrisy of the Republican leader's comments," continues Warner. "I can guarantee you that if there had not been some pre-funding, the critique would've been: 'Look at these guys! They've left the taxpayers exposed! What's going to keep the lights on for these few days? It's going to be Treasury funds or Federal Reserve funds. The taxpayer will be exposed!' ”

"If you haven't spent time with these issues," Warner sighed, "it's easy to pop off with sound-bite solutions that don't work."


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