Warner says $50 billion fund still in play

A $50 billion fund that would go toward unwinding failing financial institutions is still in play, a leading negotiator on the reform bill said Thursday. 

Sen. Mark Warner (D-Va.), a member of the Senate Banking panel and key negotiator on the fund, said he didn't think an agreement had been reached to remove the prepaid account that would be funded by big banks in order to avoid taxpayer exposure, during an interview today on MSNBC.

The fund is designed to provide capital so firms can be closed down or go into bankruptcy without using taxpayer money. 

Senate Republicans have said the fund was removed as part of negotiations to bring the overhaul legislation to the floor but new language has yet to emerge on the provisions. 

"We're trying to put some speed bumps on these large institutions -- added capital requirements, leverage requirements, trying to look at making sure that there's a whole new set of capital that would convert to equity if a bank got into a problem," Warner said. 

While there's plenty of hard work ahead, Warner predicted that the Senate could produce a bill that will get 75 votes. 

On the bailout fund issue, he is open to other suggestions including making the fund smaller so "there's at least some operating capital" while protecting taxpayers from paying for a bailout. 

"What you don't want to have is what you had with Lehman where you have a imminent collapse and there's no process in place to kind of unwind the firm in an orderly way," he said. 

Warner said while everyone involved agrees that stronger consumer rules are needed, he and others want to ensure that community banks don't have two regulators.

On derivatives, Warner said he agrees that the over-the-counter derivatives market must be used to hedge market risks but "we've got to have a limit when, sometimes, these instruments are used in an abusive way."