Democrats have agreed to jettison from financial reform legislation a $50 billion fund that Republicans claimed would institutionalize bank bailouts.
The fund, which the Obama administration opposed, was to be paid for by the banking industry's largest companies, according to draft legislation. Prior to the bill's hitting the full Senate floor, many policy experts predicted that Democrats would give up on the provision, possibly in the hope of winning over Republican support for other aspects of the bill.
According to a New York Times report, a deal brokered by Sens. Chris Dodd, D-Conn., and Richard Shelby, R-Ala., would give the Federal Deposit Insurance Corp. the power to liquidate large, failed financial firms using a credit line from the U.S. Treasury Department. The credit line would be backed by the failed firm's assets, and losses would eventually be passed on to the company's shareholders and creditors.Â
SOURCE: New York Times