FDIC backs Dodd-Shelby agreement on ending bailouts

Sheila Bair, chairwoman of the Federal Deposit Insurance Corporation (FDIC), said Wednesday that she backs a bipartisan Senate agreement aimed at ending Wall Street bailouts.

Senate Banking Committee Chairman Chris (D-Conn.) and Sen. Richard Shelby (R-Ala.) announced an agreement on how to deal with financial firms whose failure threatens the broader financial system. A key part of Wall Street overhaul legislation is an effort to prevent future taxpayer-funded bailouts.

Dodd had supported a $50 billion fund, paid for by the industry, that would have been used to help wind down a failing firm. Republicans strongly opposed the fund.

Bair had been a prominent support for creating a fund in advance of a failure.

On Wednesday, Bair said she supported the agreement between Dodd and Shelby.

"The agreement announced between Chairman Dodd and Ranking Member Shelby will assure bipartisan support for a credible liquidation mechanism that will do just that," Bair said in a statement. "When a large and complex financial institution fails, and bankruptcy is not the best option, the FDIC will have the ability to liquidate it in an orderly way and enforce market discipline by making the shareholders and creditors bear the losses. This is one of the most important steps we can take in response to the financial crisis – end bailouts and protect taxpayers from ever again bearing the costs of a bailout. I look forward to working with the Senate and House on the next steps to move a strong bill into law.”‬‪