Here's Judd Gregg yesterday, on CNN:
KING:Is it fair to say the Democrats want open-ended bailouts or is that hyperbole?
GREGG: That's a touch over the top, but they do have the problem that they have created an atmosphere and the bill does not kill the atmosphere. We're [sic] too big to fail still exists because it gives the Treasury and the FDIC the ability to come in, in a bank that's over extended itself for financial institutions that's got systemic risk and allow that entity to be continued as it tries to work out the problems. The proposal which was bipartisan, which was led by Senator Corker and Senator Warner and which I strongly support didn't allow that to occur. Unfortunately, that's been put on the shelf. That basically said to a financial institution that wasn't making it, you're done. Your stockholders are wiped out. Your unsecured bond holders are wiped out. You go basically straight to a form of bankruptcy, which is what we should do. ... Their idea doesn't get there.
So here's the thing: The language in Sen. Chris Dodd's bill, as I've previously reported, not only came from Corker and Warner's negotiations, but it also does all of the things that Gregg says it doesn't do. As part of a big communications push to rebut Gregg and Mitch McConnell's misinformation, Warner has been speaking out on the issue, and both Dodd and Warner also spoke on the floor today. Dodd put it the resolution issue clearly:
Most large financial companies would be resolved through the normal bankruptcy process ... but where bankruptcy is not an option, the bill creates a mechanism for the FDIC to unwind those companies. The management will be fired, shareholders will be wiped out, and creditors will take losses. And middle class families on Main Street won't have to pay a penny: The largest Wall Street firms will have to put up money for a $50 billion fund to cover the costs of liquidating the failed financial firm, and any shortfall will be made up by the largest and riskiest financial firms.
-- Tim Fernholz
