Republicans and Democrats continue to agree on FinReg
You expect a hard-fought compromise between two polarized parties on a high-profile issue to involve difficult concessions and serious changes. But the deal that Richard Shelby and Chris Dodd struck on the too-big-to-fail section of the financial-regulation bill doesn't have either one. The big item is that Democrats let go of the $50 billion orderly liquidation fund, which they didn't care about. As Dodd says in his letter, "because whether [banks] pay in advance or after the fact, these costs will be paid by Wall Street and not taxpayers, I have no objection to dropping that provision." (And after a 93 to 5 vote today, it's now gone.)
In fact, this Republican demand tracked what the Obama administration -- and many of the banks -- wanted originally. In a background conversation with a financial executive today, he dismissed the whole question of prepayment versus post-payment as "completely irrelevant."
There are other elements to the compromise, including a provision stating that creditors must pay back anything they receive beyond what they'd get under normal bankruptcy proceedings. But all in all, these are minor tweaks, not significant differences in approach. And it's another peculiar reminder that the two parties are pretty close together on this issue, in policy if not in rhetoric. They both appear to agree that the proper response to the financial crisis is a bill that focuses on the ability of regulators to detect risk and dismantle failing firms. Reshaping Wall Street -- either by putting more government into it in the form of size caps and leverage limits and taxes, or taking the government out of it -- doesn't really seem to be on either party's agenda.
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