Mitch McConnell says financial regulation is bailout of Wall Street

New financial regulation "actually guarantees future bailouts of Wall Street banks."
Mitch McConnell on Wednesday, April 14th, 2010 in a press conference

Condensed story from 2009 Pulitzer prize winner, Politifact.com Click here for Full Story.

Bank bailouts not in bill, but liquidation is

The financial regulations under consideration in the Senate do a number of things: The government receives additional authority to regulate over-the-counter derivatives and hedge funds. A new consumer protection agency within the Federal Reserve will regulate financial products. And the bill creates a process for federal authorities to dissolve financial institutions that are teetering on collapse.

It's that last item that got McConnell's attention. He said the bill was "taking that experience in the fall of 2008 and institutionalizing it, setting up in perpetuity the potential for additional taxpayer bailouts of large institutions."

If a "systematically significant" firm is teetering on collapse, the Treasury, the Federal Deposit Insurance Corp. and the Federal Reserve would have to agree to liquidate the firm, using a special fund created with payments from the largest financial firms. The FDIC "shall impose assessments on a graduated basis, with financial companies having greater assets being assessed at a higher rate," according to the legislation.

It clearly states that the intention is to liquidate failing companies, not bail them out. To do that, it creates a fund with contributions from financial firms, not from taxpayer funds. There is not any element of the bill that expressly permits ongoing, "endless" outlays from the federal treasury. McConnell is using seriously overheated rhetoric. Nothing in the bill "guarantees" future bailouts of Wall Street banks.

So Mitch McConnell --- Are you Kidding?