April 17th, 2010
10:31 AM ET
11 years ago

White House signals shift on Wall Street reform

[cnn-photo-caption image= http://i2.cdn.turner.com/cnn/2010/images/04/17/art.bull.wallstreet.file.gi.jpg caption="The Obama administration moved late Friday night to jump-start negotiations on Wall Street reform."]Washington (CNN) - In a move aimed at jump-starting bipartisan negotiations on Wall Street reform, Obama administration officials have signaled that they want Democratic Sen. Chris Dodd to remove a $50 billion bank liquidation fund from his financial regulation bill.

Republicans have pounced on the $50 billion provision, saying the legislation will lead to more government bailouts of large banks, effectively
stalling progress on the reform bill.

"The ex-ante fund was not in our original proposal we announced almost a year ago and we don't feel it is an essential part of final legislation," said one administration official late Friday. "The president will only sign a bill if it passes the test of putting an end to bailouts."

White House aides have vehemently denied for days the provision will spark more bailouts. Republican aides asserted the shift is a sign the White House fears the criticism is having an impact.

But Democratic officials suggested the move is really an attempt to call the Republicans' bluff to see if they still oppose the reform bill even after the controversial provision is removed. That would play into the White House's efforts to portray the GOP as defenders of the status quo on Wall Street.

Still, White House aides said the President is more focused on the larger issue of reform instead of any one provision.

"What is important is that we have a mechanism that allows us to wind down failing firms at no cost to the taxpayer," said White House spokeswoman Amy Brundage. "The Dodd bill does that, and we will work with Congress to make sure we achieve that objective."

Filed under: GOP • President Obama • Wall Street
soundoff (130 Responses)
  1. Stephen Haliczer

    The Dodd bill still does not mandate leverage restrictions for banks and that is the key to real financial reform.

    April 17, 2010 12:58 pm at 12:58 pm |
  2. Jeff

    I don't see anyone mention Glass-Steagall. The objective should be to restore Glass-Steagall, the law that kept our economy safe for 66 years, until "we're smarter than our grandparents" Congress repealed it in 1999.

    With the law in place we would not have been in this situation. Everyone makes the situation complex - it's not. Traders like Goldman Sachs are gamblers and their "investment banks" are casinos. They must be separated from commercial banking and insured deposits necessary for our economy to function. Glass-Steagall did exactly that. There was no splitting hairs, no hand-wringing - it was simply against the law for a Wall Street firm to both take FDIC-backed deposits and engage in "investment banking" at the same time; i.e. gamble with depositors money. Consider why Wash Mutual failed : $16 bil withdrawn in a 10-day period in Sep 2008. Why didn't they have the funds? Because they gambled that money somewhere else. And the company who bought WaMu, JPMorgan Chase, had to be bailed out by taxpayers. Disgusting.

    Why our economic stability should be tied to a guy like Blankfein - a career trader - is beyond me. He is a speculator, not a soldier, scientist, or doctor. If his company fails, it should face bankruptcy, without any means of special rescue from a fund or "pool" or taxpayer bailout - just like all other businesses, large and small, that are the backbone of our economic system.

    April 17, 2010 01:05 pm at 1:05 pm |
  3. Annie, Atlanta

    Why do we have to constantly endure watered down legislation in the name of bipartisanship with clearly the Republicans aren't going to play (even though they gladly take their pay). And why are Republicans siding with Wall Street who nearly brought the world economy down, instead of siding with the rest of us. These are 2 questions I certainly would like answered. There's probably more, too.

    April 17, 2010 01:05 pm at 1:05 pm |
  4. Viva

    In health care, we lost the public option.
    Now, for regulating Wall street, we will lose the $50B fund paid by banks, not the taxpayers.
    It is better to pass reform with some teeth – instead of passing something just for the sake of token passage. Yes, we want meaningful change, not a patchwork attempt at "bipartisan" gestures that gut the bill.

    April 17, 2010 01:09 pm at 1:09 pm |
  5. dave

    This really has been a remarkable time – a party dominated by old white men does nothing but obstruct the efforts to fix what they themselves created – a deregulated, greedy, business-first environment that nearly destroyed the financial health of this country. Now they oppose a stimulus bill, unemployment help for those out of work, health coverage, and breaking up the megabanks whose greed and speculation caused this to begin with.

    I hope that the next time the Party of No gains control of the Senate and the Presidency, the Dems remember the lesson – oppose everything, no matter if it's good for the country or not, so that you can discredit the President and gain political points. Spend all of your energy lying, ridiculing everything they try to do so that you can inflame the Neanderthals and knuckle draggers from the deep South so they go out and work against their own self-interests. It's been a treat to watch the tea-baggers scream against everything that could help them. What a bunch of drooling idiots, LOL.

    April 17, 2010 01:14 pm at 1:14 pm |
  6. geekman

    Mr. President, how long will it take you to learn that obstructionism by Republicans has nothing to do with reality. Hit them back hard on this. Supposedly the money in that $50 billion fund was going to come from the BANKS, right? Not the taxpayers? Get on TV, get on the radio, get on the web, have everyone you know SAY THAT! This is NOT taxpayer money. This is money the banks themselves pony up in case they do something stupid. That way the bill to wind them down or keep them solvent will not be on the taxpayers shoulders.

    What's wrong with these Dems? Have they completely given up trying to fight idiocy with facts??

    April 17, 2010 01:16 pm at 1:16 pm |
  7. Silas Scarborough

    Mostly just Dr Phil rubbish on how the parties feel about each other. Like I care.

    April 17, 2010 01:18 pm at 1:18 pm |
  8. Kevin in Boston

    To those wondering why the $50 billion would lead to more bailouts, I read an article in the Boston Globe (?) which stated that the problem was with the wording of the bill. The banks would put up $50 billion, but if that wasn't enough, the government would make up the difference. Removing that section would also remove the part about the government being forced by law to fund another bailout. Why they can't remove the part about the government picking up the tab while keeping the $50 billion for "smaller" problems" isn't clear to me, but politicians are politicians.

    April 17, 2010 01:20 pm at 1:20 pm |
  9. Joe Issano

    Let's call the republicans bluff......by the way, has anyone realized that the Tea Party is just a small percentage of the national voting bloc., and they always vote with the right.
    The Tea Party does not speak for real Americans....real americans will rise up in the fall and stem the tide of "fringe fear" by voting out the party of NOOOOOOOOOOOOO.

    April 17, 2010 01:21 pm at 1:21 pm |
  10. REG in AZ

    Once again the totally unified (intimidated and coerced) Republican Party is against what is needed and for placating Special Interests and the select few; what is new? Even the Republican philosophies that "government should only do for the people that which they can't do for themselves" and "the smallest government is the best government" have a flip side, an inherent responsibility that says government should be at least as big as needed and should do for the people that which they can't do for themselves; real financial reform falls completely in those categories. And further, if we could ever have political reform (get the money out of politics) all of the needed reforms would be moderate, effective and quickly achieved with responsible bipartisan cooperation. That is what the people should demand and do so by getting rid of all politicians who are against it, who obstruct it, without any regard for their party or political disguise (conservative/liberal).

    April 17, 2010 01:21 pm at 1:21 pm |
  11. carlos

    take the republican BLUFF and if they do not fall in line to approve the proposal, WE THE PEOPLE will call them out in NOVEMBER........and that fall will be very hard and real........

    April 17, 2010 01:27 pm at 1:27 pm |
  12. Joe Issano

    Why are the Republicans scared of real reform?.....and............isn't the example of allegations against Goldman Sachs enough to make one puke. We say "REFORM NOW", and later with the scare tactics of the right wingers and the Tea Party buffons.
    Lies, Lies, and more Lies....Republicans are angry human beings with a penchant to be dishonest......we were for it, now we're against it...LOL

    April 17, 2010 01:28 pm at 1:28 pm |
  13. Mini Carlsson

    The 50 billion dollar bank fund would have been collected from the banks, NOT the taxpayers or government. thats why the repubs didn't want it...lets see what else is up their sleeve...because of these tactics we are not getting what we want...it's just a watered down version just like the health care reform

    April 17, 2010 01:28 pm at 1:28 pm |
  14. hoaxusa

    None of this really matters. America is financially melting down like
    Greece did only slower. At some point there will be riots and eventually another civil war. This is because most TRUE Americans will not workfor the gov't. They believe the Gov't should work for the people. This gov't is NOT for the people. When gov't decides that you can't keep your own money because they think that the people in NEED that don't work should have it. Guess what? The people that actually work will stop working and fight back. If you don't believe that then you just watch!

    April 17, 2010 01:33 pm at 1:33 pm |
  15. Steve in North Carolina

    I love how Obama jumps all over the Republicans, calls them cynical and misleading, and then agrees with them that the $50 Billion fund should be removed from the bill. I wish people would get over the name calling and partisan politics and start working together again.

    April 17, 2010 01:34 pm at 1:34 pm |
  16. Fataboy

    Zac...I am cornfused....HOW does a taxpayer funded program make the banks pay for their own "mistakes"??? The real question is WHEN is the last time your banker made a mistake?/? IMHO the bank problems are being created BY the banks intentionally....

    April 17, 2010 01:38 pm at 1:38 pm |
  17. JR

    The GOP isn't serious in any regard, they'll just move to another issue to base their obstructionist behavior. Frankly, I wish Obama would stop even trying for bi-partisanship, they only want failure.

    April 17, 2010 01:39 pm at 1:39 pm |
  18. hoaxusa

    Lynda/Minnestoa April 17th, 2010 11:53 am ET
    How refreshing that for once the GOPers are being entirely honest in admitting that they are snuggling up to the best interests of coporate greed!.....Better you research before you open your mouth. Democrats receive more money from Corp.s then Republicans.

    April 17, 2010 01:40 pm at 1:40 pm |
  19. sssimon

    Zac my man, Republicans aren't interested in taxpayers. they aren't interested in regular folk at all. They are only interested in protecting the wealth of the rich. As are Democrats but just not quite as much. The Dems will throw us unwashed masses the occasional bone.

    April 17, 2010 01:42 pm at 1:42 pm |
  20. Tony

    Well, what do you think Boehner's and McConnell's marathon meetings with the big banks a few weeks ago was all about? 30 billion dollars per year worth of monopolized derivitives dealings is on the line here, people. The big banks are not, I repeat, NOT going to give that up without a big fight. They have their man to do the job too, McConnell and his cronies. Good luck, Mr. President. I would fear them more than any Tea Party whacko out there if I were you.

    April 17, 2010 01:42 pm at 1:42 pm |
  21. Pam Eugene,OR

    Please, Mr President, do not give in to the GOP again. They will still vote no and take all the power out of the reform. You tried this with health care reform and we all know how that worked out. No public option and the fat cat insurance companies won that round. Make Wall street clean up their own mess next time.
    The GOP is not coming to the people with better ideas and they only want to help big business and themselve.The party of NO proves that every time.
    Are you watching Tea Baggers? The GOP are not your friends and they do not support you. They just give you lip service while they line their pockets with rich campaigen donors from Wall Steet.

    April 17, 2010 01:44 pm at 1:44 pm |
  22. Cory Harris

    What Obama is doing is simply baiting them when it comes to that removal that is it.

    April 17, 2010 01:45 pm at 1:45 pm |
  23. Angela

    The tea party is watching? What a bunch of gutless idiots. Putting in the equivelent of the FDIC which would be funded by the big banks is a responsible thing to do. Mcconnell was off meeting with the big bankers who want no regulation then he comes back and lied about the content of the bill. Even his home town newspaper stated he liedI wouldnt vote for a republican again ever.We are just digging out of the mess Bush got us into and the GOP is right back there attempting to create the same situation all over again.

    April 17, 2010 01:45 pm at 1:45 pm |
  24. John

    I still think they should just bust up those "too big to fail" and quit tap-dancing around future bail-outs etc., and then let the chips fall where they may.

    April 17, 2010 01:46 pm at 1:46 pm |
  25. OriginalRealityCheck

    Why not make the Federal Reserve pay all losses due to bank failure; and not by loans (printing more paper electronic money), but out of their profits. Since they make policies and controls, and now they want to be regulators also It would be the same as a bonus system, but it would go negative, so they would have to run it in our best interests.

    Actually, the Federal Reserve, and all the interest we pay to it, are totally unnecessary and way too costly. So it should be abolished (for the second time) anyway.

    April 17, 2010 01:46 pm at 1:46 pm |
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