"The American people have not been told the truth about what's in the Dodd bill.
“The bailouts and government takeovers are still included, and it is up to the Senate freeze this legislation before it moves any closer to passage."—Bill Wilson, President of ALG.
May 19th, 2010, Fairfax, VA—A Wall Street Journal editorial published today confirms that an unlimited bailout authority is still contained in the Dodd financial takeover bill.
According to the editorial, "Gus Sauter is the Chief Investment Officer at Vanguard Group, the mutual fund giant that manages more than $1 trillion of investor savings. Mr. Sauter told us this week that, even after recent amendments, the Senate bill still allows the Federal Deposit Insurance Corporation to play favorites among the creditors of a failing institution undergoing FDIC resolution."
The editorial continues, "Specifically, the FDIC could provide a 100% bailout to whichever of these creditors it favors, while imposing severe losses on other investors who bought the exact same bonds."
Americans for Limited Government President Bill Wilson today said, "The American people have not been told the truth about what's in the Dodd bill. The bailouts and government takeovers are still included, and it is up to the Senate freeze this legislation before it moves any closer to passage."
Wilson continued, "This is exactly what Americans for Limited Government has been saying, that despite the Dodd-Shelby amendment, the bill still contains bailouts. We thank the Wall Street Journal for calling it like it is."
Wilson said he hoped that Senate Republicans would filibuster the legislation "and exhibit the courage of their convictions. They know this bill will be a bad deal for the American people. If they now rise to stand with the people, the people will stand with them."
ALG has updated its comprehensive backgrounder, "Down a Rabbit Hole," on the dangers the legislation represents and the shortcomings of various amendments, including the Dodd-Shelby amendment that passed 93 to 5.
According the ALG backgrounder, "Although the Dodd-Shelby amendment provides that the assessments may be charged to the bailed out or seized company to recoup the costs of the bailout or takeover, they may not be imposed if such payments were 'necessary to initiate and continue operations essential to the implementation of the receivership or any bridge financial company.'"
The backgrounder continues, "Those funds would be drawn from FDIC-levied assessments on the $50 billion or greater companies. This feature necessarily provides for bailouts, and makes the fund unlimited and permanent, because as it is used up, the FDIC can just charge the banks more assessments without any Congressional approval to bail out or seize more companies."
"Nothing has substantively changed. Despite the efforts of Senate Republicans, the orderly liquidation fund still has not been removed. After all the amendments voted on, the government can still seize any institution it wants, and then keep it, reorganize it, or redistribute it without any Congressional approval," Wilson had said after ALG conducted an analysis of the amendments.
The Dodd bill, even with the Dodd-Shelby amendment, creates an unlimited "orderly liquidation fund" financed by assessments on approximately 60 bank holding and insurance companies that ALG says will be paid for by any American that uses the financial system through higher costs of transactions, premiums, and bank fees.
The Senate could vote today on cloture for the Dodd bill. Wilson said "time is running out for the American people to rein in the unbridled expansion of federal power to intervene in the economy as never before."
"'Down a Rabbit Hole:' The Threat Posed by the Dodd Bill to the Private Sector," Updated May 13th, 2010, Americans for Limited Government.
Letter to the U.S. Senate, ALG President Bill Wilson, April 26th, 2010.