A little pro and con regarding the financial reform bill from our friends at Open Congress

$50 Billion Liquidation Fund is for Killing Sick Mega-Banks by Donny Shaw April 23, 2010

Editor's notes: indeed, some Republicans are concerned that the $50 billion in this financial reform bill is nothing but an open door for endless bailouts. This article from Open Congress deals with that concern but ignores the fact that a 700 billion dollar limit was implied with the TARP bill and trillions have been funneled through TARP without notice. In fact, if you do not read Midknight Review, you know nothing of the 24 trillion dollar slush fund that TARP has become. Is there language in the bill that prohibits the expansion of this 50 billion dollar limit? Would such language actually be a barrier to expanding that total? To each question, we have to say, "We do not know." But more than the funding concern, Midknight Review is more concerned with the role Big Government will be allowed to play in the choosing of winners and losers. Regulation is one thing. The power to take down a private business concern, financial or otherwise, is the very definition of "socialism." THAT is our objection. Big Government has no business picking winners and losers -- especailly in view of the fact that it cannot manage its own house at all. You do know that the US Government owes more (130 trillion dollars all told) than its material worth counting the Nationalized Parks system and all Federal buildings and properties (about 60 trillion dollars) ?? !! Anyway, here is the review from Open Congress. See what you think. --- jds

The Republicans' claims that the $50 billion "orderly liquidation fund" in the Restoring American Financial Security Act would "guarantee bailouts" have been pretty thoroughly debunked at this point, but I'm reading through the comments on the OpenCongress bill page and there still seems to be some confusion. For example, the highest rated comment right now is an attempt to fight back against the Republican bailout claim, but it still gets it a little wrong. "My understanding is there is a fund, funded by the banks themselves to bailout the large banks. So it doesn't impact taxes and it just means they have to bail themselves out not the government," the commenter writes.

That's not quite right. There is a fund in the bill (the "orderly liquidation fund") that would be funded by the big banks in order to keep taxpayers from being on the hook if they fail, but the fund would be used to put failing banks to death, not to bail them out. With bailouts, banks get rescued by the government and survive. Under this bill, failing banks would be executed by the government. The orderly liquidation fund would provide the working capitol the F.D.I.C. would need to carry out the complicated process of winding down big, failing banks.