Proposed $50 bailout fund nixed from financial regs bill

by Vicki Needham - 05/04/10 10:08 PM ET

Republicans have argued that the fund — proposed by FDIC Chairwoman Sheila Bair — would allow taxpayer-financed bailouts to continue.

Sen. Bob Corker (R-Tenn.) said today that the Dodd-Shelby agreement would close loopholes for loans provided by the Federal Reserve and FDIC, placing stricter limits on those funds while requiring they be paid back in full.

During the past couple of weeks there were various reports from Republican ranks that the bailout fund had been removed from the bill. More recently, several Democratic Senators close to the negotiations including Sen. Mark Warner (D-Va.) said they were under the impression that the fund was still intact.

President Barack Obama told some of the nation’s top executives today that the bill can’t get watered down in compromise and, as he’s done for several weeks, urged lobbyists to “join us rather than to fight us.”

The White House and Treasury Secretary Tim Geithner have publicly opposed the fund and, instead, have pushed for a bank tax. Senate Finance Chairman Max Baucus (D-Mont.) told The Hill earlier today that it didn’t look like a bank tax had enough votes for approval to be added to the bill to put tighter controls on Wall Street firms.

Senate Majority Leader Harry Reid (D-Nev.) said today he wants to complete the bill by next week. But his counterpart Senate Minority Leader Mitch McConnell said it would take longer than that.

Agreements have yet to be worked on how a consumer protection agency would work or how derivatives would be regulated.

Tags Barack Obama Bob Corker Harry Reid Mark Warner Max Baucus Mitch McConnell