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. Nathan in Washington

    @ Bill from Georgia: I don't think it does any good to call Republicans "evil". Such inflammatory language is unnecessary, and only results in knee jerk back lash from the right, not better communication and bi-partisan cooperation. Republicans are stupid, not evil. And we need to start treating them as such if we are going to get anywhere.

    April 17, 2010 01:53 pm at 1:53 pm |
  2. califoniadreamin'

    It is amazing how President Obama is trying to deflect attention away from the new and totally unworkable health care system. Talk about fiscal responsibility! How hypocritcal and non-transparent this administration has become. All politicians appear to be cut from the same cloth now matter how they try to portray themselves.

    April 17, 2010 01:55 pm at 1:55 pm |
  3. Typical!

    Despite Mitch McConnell's whinings and cowtowing to his financial masters, this fund is an important part of the whole reform package.

    How typical of the Democrats to retreat from a position of strength!

    April 17, 2010 01:55 pm at 1:55 pm |
  4. Ricky Parks

    I am a converted Democrat....yes,I said it........from being a Republican since I was 18.I am sick and tired of this Wall Street greed.I feel like I'm paying taxes.......TWICE!!!!!Although I'm not an investor,I'm smart enough to know that I (and everyone else) am paying for greed when I purchase gas @ the pump or any transaction daily that is required of my basic existence.I was highly criticized by my peers for voting for Obama.I'm glad I did.It's about time we had another steel-balled president like Ronald Reagan.I truely hope that Goldman-Sachs burns for what they've done,and anything short of that would be a slap in the face to the president and what this administration.Mister President,LET THEM FAIL!!!!!!All new corps and reps will spring up in their wake.

    April 17, 2010 01:56 pm at 1:56 pm |
  5. David

    Most of you people are idiots<<<<<<<<<<<<<<<<<<<, better than 80 percent of posts on here.

    April 17, 2010 02:06 pm at 2:06 pm |
  6. Dan

    It's not that complex. Wall Street gambled once again. Some of them lost and were toast. But they insisted that if they went down it would take the U.S. economy with them. The U.S. government may not care about bailing out AIG but it is their job to keep the economy sound.

    Enter the 50B pool, all of which was to be collected from Wall Street firms, to make sure if a large firm failed, the 50B would help ensure the economy wouldn't stall too.

    It is obvious the Republicans are furiously doing whatever they can to confuse the issue and protect their corporate masters on Wall Street.

    April 17, 2010 02:08 pm at 2:08 pm |
  7. craig

    We're fighting two wars, have 10% unemployment, have states careening towards bankruptcy, we're racking up record debt with a record deficit, and these are the things the Democrats want to spend their time with? They're trimming the bushes while the house is burning down.

    Remember this November who took control of both houses of Congress in November of 06 and how things have gone since.

    April 17, 2010 02:08 pm at 2:08 pm |
  8. Michael T.

    I am really surprised and disturbed about the vitriol, negative stereotyping and 'swaying by emotion rather than by reason' in these comments. The fact is that our major two parties BOTH have a long string of economic failures. The current Administration is banking on the failed policy of Keynesian economics, which is thoroughly and utterly discredited in modern economic circles and the Republicans focus on supply side economics without taking into account changes in the global economy or on how perception changes value. The left only blames Wall Street (an anti-capitalist streak) and the right blames the government (Fanny Mae, Freddy Mac, The Fed (a Quasi-Gov agency) etc.) as part of their anti-big-government concern (except when they have power). What people need to understand is that neither party is seeing the whole picture, taking responsibility or offering intelligent responses. The Tea Partiers are also promoting candidates that are not as economically intelligent as they could be.

    What the country needs to understand is that economic upheavals are inevitable and that a global infrastructure to warn of imminent collapses and work together is needed. Sadly, people are focused on negative stereotyping and blaming rather than determining the best long-term fix.

    April 17, 2010 02:10 pm at 2:10 pm |
  9. Madness

    It is becomg clearer and clearer that the Republican "leadership"
    has no ethical nor moral compass beyond even the low expectations for career politicians.

    I am beginning to believe that it is time for a French-style revolution.
    "Let them eat cake."

    April 17, 2010 02:22 pm at 2:22 pm |
  10. jason

    LOLLERCAUST @ 2 parties fighting. perhaps obama's *FINALLY* living up to his promise of accountability and transparency about where all this money *strike that* OUR MONEY is going that he's blowing. he hasn't been so hot about doing it so far, here or abroad.

    April 17, 2010 02:23 pm at 2:23 pm |
  11. Dennis

    Here's a trade that might work: cap the size of national banks effective as of 2014 at $100 B, in exchange for removing the $ 50 B assessment. Any banks remaiing larger than that after 2014 would have to build the assessment to $50 B in the subsequent five years.

    What objections would anyone, other than excessive-sized banks, have to such a process? As Johnson and Kwak so understandably postured on Moyer's show last evening, there are no legitimate reasons why any banks should exceed such a maximum of $100 B.

    April 17, 2010 02:27 pm at 2:27 pm |
  12. Bull

    In November ,the voters will jump-start our elected clowns.Time to remind them ALL,they work for us !

    April 17, 2010 02:30 pm at 2:30 pm |
  13. zeek1

    Any amount of regulation/reform is more than we would have gotten from a President McCain. Republicans dont have the huevos necessary to bring the bankers into line. At least Obama is trying. Kudos !

    April 17, 2010 02:31 pm at 2:31 pm |
  14. lipton

    We confused – our admirable/rightful promotion of the market – with our shameful/wrongful negligence of protections – from allowing the market to become a casino house for the financial industry (including mortgage, credit card and healthcare insurance) – leading to a house of cards for the overall economy.

    The economic shock/overhang/legacy we are experiencing is primarily due to the debilitating depths we got dragged to by the sudden liquidity and credit crunch emanating from growing fiduciary negligence and exploitation by our beloved, all-knowing, selfless, conflict-free, unfettered, self-regulating (de facto) judge/jury/&executors of our financial industry. For the worthy cause of a healthy market financial industry, we allowed a pervasive, ‘blindly trust but don’t verify,’ attitude/mindset/practice tempt and seduce our most pretentious masterminds comprising our financial industry club to run roughshod with other peoples (our) money for the purpose of wildly contriving self-absorbing real and imaginary (eg think Bernie Madoff, Goldman Sachs, AIG, Bear Stearns, Lehman Brothers, Enron, … styled fleecing) proceeds, fees, commissions, bonuses, and advances at the mercy of our economy.

    Then, capped off with a bailout extorted by and for the very club of people who cutted off the economy at the knees.

    Forget about the outrage. Where are our sustainable incentive policies, checks and balances, overseers, control valves, and enforcers?

    April 17, 2010 02:33 pm at 2:33 pm |
  15. Reality

    I really have to laugh at how incredibly ignorant the U.S. populace has become. You treat politics like it is a basketball game, our side versus them, and no matter what your "team" does, even to you, you cheer them on. Meanwhile the government performs the same exact three things over and over again, and assumes more control.

    1) Create a problem.
    2) Form a reaction.
    3) Create a solution.

    Nobody thinks about the nitty gritty details on how this stuff really develops. We suck, and we deserve whatever becomes of us. I just pity our children and grandchildren, they don't deserve the fate that will befall them due to our stupidity

    April 17, 2010 02:36 pm at 2:36 pm |
  16. Dave

    Removing that part of the bill removes the explicate guarantee provided to creditors of risky companies. The FDIC is supposed to be funded by banks, but what happens when the fund runs out? Full government guarantee.

    It also removes the temptation to say that banks must be profitable so they can keep this bogus fund stocked in case of failure. It was just a really bad idea from the start. There's no way we can have the government backing up creditors of risky investment banks. Let us wind them down when they fail, but don't provide money outside of the company itself to do so.

    April 17, 2010 02:41 pm at 2:41 pm |
  17. Laura

    This is just crazy. We are a capitalistic economy and society. Why the heck are we letting our government pay off and control not only banks, but also car companies and now all aspects of Wall Street??? You gotta be kiddin' me!

    What have all these bailouts done for US citizens anyway?? We are still losing our jobs and our homes, driving on tiny pothole-ridden highways over rickety bridges, and begging medical insurance companies for mercy (which will get worse in 2014).


    April 17, 2010 02:43 pm at 2:43 pm |
  18. Debby

    Please keep Dodd out of anything related to finance's. He is the one who got us into this mess in the first place with his pal Barney Pfife.

    April 17, 2010 02:45 pm at 2:45 pm |
  19. lib

    How ANYONE in their right mind would ever vote for a republican again is beyond me, unless they are receiving kickbacks.

    April 17, 2010 02:49 pm at 2:49 pm |
  20. John

    Why not reinstate the Glass–Steagall Act? Why do they have to reinvent the wheel?

    April 17, 2010 02:51 pm at 2:51 pm |

    I liked the idea of private firms putting money in a pot per say for a rainy day........ This would have been their money to bail a troubled firm out w/o passing the burden to the tax payer.........I do still believe that other provisions in this bill, will protect us the tax payer.
    The WH took this provision out....fine..........the GOP had BETTER jump on board w/ this reform, or they are truly capping off a year and a half of pure party first power grabbing obstructionism..........
    I am a registered republican, and will stay that way......
    However Obama & the DEMS will get my vote in 2010, & 2012, as they did in 2008, simply b/c these are the only adults in the room.......the GOP and their crash and burn style politics, that has produced no meaningful legislation during one of America's most trying times in history, is a horror story, and I for one will not reward do nothing politicians w/ the HOUSE of REPS, or the SENATE.

    April 17, 2010 02:52 pm at 2:52 pm |
  22. Kevin

    Let me ask all of you a question about the $50 billion being raised from the banks:

    Do you think they just have this money sitting around?? Answer for those of you who don't know - NO!

    Where will the banks get the money from?? Again...answer for those of you who don't know - 2 places:

    1. They will raise fees and pass them on to the "little guy"
    2. They will reduce their holdings – thus reducing their lending ability by 5-1 for every dollar they have to put into this fund – again, hurting the little guy.

    It's really a shame that this administration is making corporate America the "evil darth vadar" of our country. In fact, corporate america is what makes our country great. If we lose the incentive to work hard to succeed then we become like all the other socialist countries of the world. Something to think about....

    For what it's worth I am an independant – NOT republican or democrat.

    Kevin in Orange County

    April 17, 2010 03:09 pm at 3:09 pm |
  23. Gloria Ramos

    This fund was Chris Dodd's final "eff you" placed on the American people on his way out the door. How much would he have gotten in kickbacks? Who knows? Who'll tell as long as Reid runs the Senate?

    April 17, 2010 03:10 pm at 3:10 pm |
  24. BajaJohn

    I'll bet the Republicans will want to put that $50 billion back in the bill. These Wall Street bought-and-paid for Republican politicians will do anything to please their financier masters. While they are at it, they do need to reform the Tax Code, to remove pork-laden tax incentives to benefit these crooks.

    April 17, 2010 03:14 pm at 3:14 pm |
  25. Chris in South Dakota

    Randall in CA: California is more evidence of a genetic defect in humans than the Republican Party.

    April 17, 2010 03:15 pm at 3:15 pm |
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