April 18th, 2010
11:59 AM ET
12 years ago

Dem defends $50B fund, challenges GOP to provide alternatives

Washington (CNN) – Democratic Sen. Mark Warner of Virginia, a member of the Senate Banking Committee, defended a controversial $50 billion fund in the current version of financial regulatory reform legislation and challenged the top Republican in the Senate to provide alternatives that are more palatable to the GOP.

Warner said Sunday on CNN’s State of the Union, that the disputed fund was the last in a series of measures designed to revamp how Washington oversees Wall Street and to prevent taxpayers from again being called on to provide massive infusions of cash to financial institutions that are the pillars of the economy.

Despite Republican protests that Democrats are trying to pass the reform legislation in a partisan way and with next to no Republican input or support, Warner said the process of crafting the bill “has been very bipartisan.” He said he has been working for more than a year with Sen. Bob Corker, R-Tennessee, on crafting the package of reforms.

The crafting of the legislation, the former Virginia governor said, has been driven by three goals: (1) “end ‘too big to fail,’” the notion that some financial institutions are so important to the economy that they should not be allowed to collapse under any circumstances because of the wider damage their demise would do to the economy; (2) “never have taxpayer exposure [for bailouts] again,” and (3) “make sure that we set up financial rules of the road for the 21st century.”

These considerations, he said, led to the inclusion of a number of provisions in the bill that are designed to act as “trip wires, speed bumps to make sure we don’t get to a crisis.” Warner said the bill sets up a systemic risk council to act as “an early warning system.” The bill also sets additional capital requirements for large financial institutions, limits the ability of firms to leverage their assets relative to their liabilities, and creates a new class of contingent capital in the form of debt that would convert to equity if a firm fell on tough financial times.

Warner said the bill requires “large, systemically important firms” to “write their own funeral plan,” a plan developed beforehand “so that if they get in trouble there’s an orderly process through bankruptcy that can unwind them appropriately.”

The $50 billion fund that has been the focus of partisan barbs in the past week is only a fall-back measure if all other components of the bill fail to forestall another financial crisis like the one that occurred in late 2007 and early 2008, Warner said. In that situation, a firm that fails would be subject to a resolution process through bankruptcy under the bill. “It’s set up in such a way that no rational management team would ever want it,” Warner told CNN Chief Political Correspondent Candy Crowley.

The $50 billion fund “would be funded by industry,” Warner said, and was conceived of as a way “to keep the lights on [at a collapsing firm] until you could actually borrow enough money through the FDIC process to orderly resolve and get rid of the firm.”

Warner said he was open to alternatives to the fund, which many Republicans view as opening the door to perpetual, taxpayer-funded Wall Street bailouts. “I’d love to hear from Senator McConnell and some of the others, specifics not just general attacks,” Warner told Crowley. He said Republicans were being “a bit hypocritical” in attacking the $50 billion fund because without it, taxpayers might have to pay to begin the process of winding down a large financial institution.

Sounding a common refrain during this week’s partisan wrangling over the financial reform bill, Warner said he would like to see Democrats and Republicans set their differences aside.

“This should not be a partisan issue,” he said. “I think it’s time to get on with it,” he added, pointing out that new regulatory measures are still not in place 18 months after the greatest financial crisis since The Great Depression.

soundoff (39 Responses)
  1. hal

    Ask Paul Ryan- he'll tell you what to do- he is the one I trust from the Republican Party- go Paul!!

    April 18, 2010 02:09 pm at 2:09 pm |
  2. Victim of GOP Taliban

    The Democrats although significantly better than the GOP, still are caving in to the ultra-powerful banking industry lobbyists. Not even anything in place to stop shiesty accounting and defrauding investors? Not much bite to this reform but better than the alternative GOP do nothing approach.

    April 18, 2010 02:10 pm at 2:10 pm |
  3. Mojo

    You know what's telling? In between negotiations on the Senate floor, and in between Senate Finance Committee meetings, Republicans keep going back and forth to banking lobbyists, wall street, and big bankers to take the cues on how to try an dismantle and disrupt the legislative process. It's pretty sick to think republican politicians are simply a mouthpiece for the bankers and wall street elite.

    April 18, 2010 02:14 pm at 2:14 pm |
  4. Seth

    "Alternatives"? That's too big a word for Republicans to wrap their Wall $treet greedy minds around. "No" is more to their liking.

    April 18, 2010 02:33 pm at 2:33 pm |
  5. jenn, philadelphia

    while it's a good thing the $50 billion comes from the banks themselves, we should remember that TARP 1 and TARP 2 equaled almos $2 trillion together. To suggest that having this fund will mean tax payers will not have to pay for further bailouts is the deception.

    April 18, 2010 02:34 pm at 2:34 pm |
  6. CBR

    Good for Senator Warner. Let the American people know that not a Republicans are sitting on their hands. The Republicans have had plenty of opportunities to work in a bipartisan manner. Their leadership has determined that they will not. I wonder how long it wil be before some Republicans realize they are being hoodwinked by McConnell, McCain, Cantor, Boehner and others. Never have I seen a political party marching as one group. The truth i moist of the people are afraid of losing their seniority or chairmanships should the Republicans come back to power.

    In direct opposition to Sen Warner's approach we have Sen. Collins doing her whining about the lack of support she is receiving from the Democrats. Doesn't she realize her Republican party has been doing that all year. Ev3en she is guilty of what she states that Democrats are doing.

    We need more people with spines who are willing to work together for the populace Now wouldn't that be a new idea for the Republicans.

    April 18, 2010 02:45 pm at 2:45 pm |
  7. fernando

    It's becoming more and more obvious that the Republicans have made a serious error in their approach to the first two years of Obama's admin. They have been hell bent on taking the dems down and pointing to the midterm elections to save themselves and give them a greater number. So focused that they have forgotten how to participate in the process of representing the people and helping find solutions to the immediate problems that are hurting us now. It is great testament to how little they care about the poeple and how much they crave power. These are not the people we need representing us.

    April 18, 2010 02:49 pm at 2:49 pm |
  8. rosslaw

    Rep. John "the tan man" Boehner in a publicized meeting with Jamie Dimon and Sen. MItch McConnell have both touted the Republican's willingness to oppose any legislation restriciting Wall Street in any way shape or form as a fund raising device on Wall Street. These creatures can't possibly believe that there is a life after death, let alone a Higher Power that will render judgment.

    April 18, 2010 02:53 pm at 2:53 pm |
  9. Bobby

    I have one. No bailouts, regardless of who pays or how it is paid. If consumers and stockholders want to continue to use and invest in these failed organizations, so be it. Fail once, shame on you. Fail twice, shame on me. Pull any and all government business away from these crooks. Isolate them. This will create opportunities for others to tear down the walls of "too big to fail". I am tired of our government thinking that they have to babysit these crooks of which their only incentive is to get rich and screw customers.

    April 18, 2010 03:00 pm at 3:00 pm |
  10. Sue

    NO bail out money/tax payer money to be used to bail out businesses.......

    Stand strong on this Republicans---just like the majority of other issues-–you will have the majority of citizens/voters supporting you.

    The majority in the country no longer trust ANYTHING that Obama, Pelosi, Reid and the Demcrats are doing.........

    So, just keep getting the facts out there--that this bill will allow $50 billion for bail out money-–and the majority will be supporting you.

    April 18, 2010 03:10 pm at 3:10 pm |
  11. Ryan

    I actually have met Mark Warner a number of times personally, he's the real deal and a good guy. When he governed Virgina, the state ha a huge surplus, similarly when Clinton governed the u.s. ( and I was never a fan of Clinton) we had a surplus nationally....so tell me why is it exactly that the GOP screams wasteful spending when everytime they're in charge of the pursestrings we go into debt and STILL have failing schools and potholes in the road and terrorist attacks?

    The big banks are absolutely against the democrats and have a vested interest in stopping financial reform. So by that LOGIC who do you think will be handsomely rewarded for stopping bank reform legislation? OBVIOUSLY REPUBLICANS!! Name one piece of legislation that didn't backfire on the middle class that was drafted by republicans? Because you can't. The only people republicans stand up for are big corporations and the wealthy 10% of the nation. They give billionaires tax breaks for outsourcing jobs...it's called corporate welfare.

    The GOP says "No" to everything except GREED & POWER.

    April 18, 2010 03:12 pm at 3:12 pm |
  12. Mihael

    The GOP and the tea Party are basically racist,fear mongerers and doom sayers. If the Obama admin and the democrats bring the heaven on earth GOP and the Tea Party ll say Noooooo,. They re enemies of progress and don't ve the interest of this country at heart but the interest of the party that led us into this recession since the great depression. The people are not stupid fools but wise and smart. God bless america for giving us the democrats and the visionary leadership of Prez Obama. We are reforming wall st,going beyond the moon,greating green and sustanable economy, energy independent and more to come. I can smell change of the 21st century. Come November dems ll still maintain majority to facilitate real change.

    April 18, 2010 03:19 pm at 3:19 pm |
  13. Anthony

    Don't let the GOP get away with the lies people.

    April 18, 2010 03:30 pm at 3:30 pm |
  14. Mihael

    GOP takes campaign money from big coperations and bank lobbiest in wall st to fight the financial reform bill against the poor tax payers of this country. I think some media houses including fox news are misleading, misguiding, misinforming and encouraging hate speech to their innocent and less informed audience who have no other source of getting credible and reliable information. God bless america.

    April 18, 2010 03:35 pm at 3:35 pm |
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