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Rep. Frank changes position, says he now supports pre-funded bailout trust

By Silla Brush - 10/30/09 01:12 PM ET

Rep. Barney Frank (D-Mass.) has shifted his position on a key part of the debate over financial reform.

Frank, the chairman of the House Financial Services Committee, said Friday that he is in favor of financial firms paying into a pre-funded trust that would cover the costs when the government takes over failing firms.

This puts Frank on the side of Sheila Bair, chairwoman of the Federal Deposit Insurance Corporation (FDIC). In testimony to Frank’s committee on Thursday, she opposed the notion of raising money from fees after a firm fails. Instead, she said companies should be assessed beforehand.

The Obama administration is strongly urging lawmakers to support new so-called “resolution authority” powers so future administrations don’t need to seek bailout money from Congress.

The Obama administration and Frank earlier this week both said said they support an after-the-fact assessment to help pay the costs associated with a failed firm. That assessment would fall on firms that have at least $10 billion in assets.

It is unclear whether the Obama administration still holds that position.

Steve Adamske, Frank’s spokesman, confirmed Friday that Frank has changed his view in favor of a pre-funded pool of money.

The switch would represent a major change in how “resolution authority” works.

Treasury Secretary Timothy Geithner has said resolution authority is one of the top priorities of the broader effort to overhaul the financial regulatory system.

Democrat and Republican critics of the proposal say that it would perpetuate the government’s role in supporting failing businesses.


Source:
http://thehill.com/homenews/campaign/65649-frank-changes-views-supports-pre-funded-bailout-trust-

Comments (7)

SHEILA BAIR WAS THE FDIC CHAIRMAN AS THE WHEELS CAME OFF THE BANK CRASH. SO NOW SHE WANTS PRE-FUNDING? STUPID IDEA TO GO WITH A STUPID CONGRESSMAN. TWO AND TWO EQUALS FIVE.BY DAN SHANTEAL on 10/30/2009 at 15:26
Isn't it DemocratIC or have you bought the Republicans talking points!?BY Kate on 10/30/2009 at 19:14
Barny Franks is the cause of the problem, he has to change his position for a lot of more reasons than this. He may be a fast talker but he is no deep thinker. The problem started with the housing industry and people were allowed to purchase houses with nothing down and with inflated prices. It created a concept that there is no need to concern yourself with the possibility that the value of house goes one way: up. That concept was short sighted and it turned the banking industry in a dire downturn. The "buble" caused many problems and it caused the housing industry to become realistic. Of course the problem became an overreaction, but it did cause the delema we are now facing. The Barny Franks delema has not been clear in many peoples mind. It is needed to get very clear thinkers to express themself and be much more clear in futur thinking, not just the "now" thinking.BY Hospel on 10/30/2009 at 21:31
Banks and Financial firms should pay up front, its the smartest move I have heard this year.BY Perfect Sense on 10/31/2009 at 03:52
I seem to remember others that got a hand out. Can we say Auto Manufactors? You can't just look at assessing fees to the financial industry!BY MDCD on 10/31/2009 at 12:59
Another slush fund congress will dip into and use up so that when it is needed, oops.BY Scott on 11/02/2009 at 09:37
Is this going to be a trust fund or a slush fund? If it's like the Social Security trust fund there will be no money in it only IOU's. The government will transfer the money collected into the General Fund and will debit the Bailout Trust Fund. Naturally they will have to pay interest on the money borrowed from the fund and will have to raise taxes to get real money when they need it to bail a "too big to ail" company out. Sorry Barney, that's what Capter 11 bankruptcy is for. Stop sticking it to us tax payers.BY Robert Lovretich on 11/02/2009 at 10:45

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