• Voting Record

    Gwen Moore

    Voting Record

    LOADING VOTES....
Print

U.S. House Panel Approves Measure to Repeal Resolution Authority

4/18/12

 

By Phil Mattingly on April 18, 2012
 
U.S. House panel approved a measure to repeal the federal government’s power to seize and liquidate the largest financial firms, ignoring objections of Democrats and Treasury Secretary Timothy F. Geithner. 
 
The Republican-led Financial Services Committee backed the legislation today in a 31-26 party-line vote, reigniting debate over a Dodd-Frank Act mechanism crafted as part of an effort to prevent a repeat of the market tumult that followed the September 2008 collapse of Lehman Brothers Holdings Inc. 
 
“This authority is not a death panel for failed institutions,” said Representative Spencer Bachus, the Alabama Republican who leads the committee. “It is taxpayer-funded support for their creditors and counterparties.” 
 
Bachus and his colleagues targeted the resolution piece of Dodd-Frank, approved by a Democrat-led House in 2010, after Republicans were instructed last month to find $261 billion in cuts and savings to offset looming cuts to the Department of Defense. The measure passed today has little chance of gaining approval by the Democrat-led Senate or President Barack Obama. 
 
The Congressional Budget Office said the measure, which would also end Obama’s Home Affordable Modification Program, subject the Consumer Financial Protection Bureau to the congressional appropriations process and reauthorize the National Flood Insurance Program, would lead to $35.1 billion in cuts or new funds over 10 years. 
 
‘Gimmick’ 
Representative Barney Frank, the Massachusetts Democrat who co-wrote the regulatory law that bears his name, called the CBO estimate the that the repeal would save $22 billion a“gimmick” because regulators are required by the law to recoup any taxpayer dollars used in the process. 
 
Frank’s objections echoed those offered by Geithner in a letter sent to lawmakers yesterday. Repealing the resolution authority “would critically undermine the government’s ability to limit the damage to the economy in the event of future financial crises,” Geithner wrote to Bachus and Frank. 
 
“This returns us to 2008, where there was no capacity to deal with a failing institution,” said Frank, the Financial Services Committee’s top Democrat. 
 
The resolution authority was crafted by lawmakers as part of Dodd-Frank’s response to the credit crisis that led to government-aided bank mergers and taxpayer bailouts to bolster markets after Lehman’s collapse. The authority, signed into law by Obama in July 2010, empowered the Federal Deposit Insurance Corp. to liquidate systemically important firms when they become insolvent. 
 
Reconciliation 
The Financial Services panel was required to find $29.8 billion by the Republican budget passed by the House in March. The budget issued so-called reconciliation instructions to the committees; a parliamentary device that has been used to force changes in tax and entitlement laws since it is immune to the filibuster in the Senate. Senate Democrats have said they will not take up the House-passed budget. 
 
“The Senate is not in agreement with this so this is a bogus budget reconciliation process,” Representative Gwen Moore, a Wisconsin Democrat, said. 
 
Geithner, separately in his letter, also weighed in on several House proposals to make change to the derivatives regulations required by Dodd-Frank, saying regulators haven’t completed rules and making changes during their implementation would undermine the process. 
“Treasury believes that the proposals are at best premature and that regulators should be permitted to continue their work through the rulemaking process,” Geithner wrote. 
 
To view this article online, please click here.