Firing back at harsh criticism unleashed yesterday by Republicans against financial regulatory reform proposed in the Senate, White House officials said today the other party is following political “marching orders” to drum up links to “the big bank bailout.”
Senate Republican Leader Mitch McConnell denounced the regulatory overhaul bill as pro-bailouts in a speech yesterday. The legislation, facing heated debate for the next several weeks, empowers the Federal Reserve and an oversight council to dismantle at-risk institutions that would destabilize the economy.
Today, President Obama met with House and Senate leaders from both parties, urging bipartisan support and rejecting Republican criticism.
“I’m absolutely confident that the bill that emerges is going to be a bill that prevents bailouts,” the president said.
On the White House blog, though, the rebuttal to McConnell’s remarks wasn’t as restrained as the president’s.
Jen Psaki, White House deputy communications director, said Republicans were taking “marching orders” from a political consultant “who has told them that the best way to oppose real reform is to link it to the bank bailouts.”
“Here are the facts: this bill does the exact opposite of what these critics say it does,” wrote Psaki. “The Senate bill explicitly mandates that a large financial firm that faces failure will be allowed to fail, and it explicitly prohibits the use of any funds to ‘bail out’ a failing firm.”
After meeting with Obama, Republicans remained resolute in their opposition.
“The bill creates bailout funds, authorizes bailouts, allows for ‘back door’ bailouts from the FDIC, Treasury and the Fed, and even expands the scope of future bailouts,” McConnell said yesterday.
Psaki said large financial firms “facing insolvency in times of crisis” will be shut down or broken apart, and its management replaced if it is maintained at any level.
“Creditors will suffer losses,” Psaki continued. “Equity holders will be wiped out. And large financial firms, not taxpayers, will be required to bear the costs. Under the Senate bill, the taxpayers will never be asked to foot the bill for Wall Street’s irresponsibility.”
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