Research Briefing

36 Economists And Experts, Including Clinton Labor Secretary Robert Reich: “Neither The Bill Passed Earlier This Year By The House, Nor The One Currently Under Consideration In The Senate Would Have Prevented The Crisis.” (Marcellus Andrews, et al., Letter To Senators Reid and McConnell, 4/14/10)

• Economists, Experts Call For Bill That Will Actually “Eliminate A Perpetual System Of Government Sponsored Corporate Bailouts Financed By The Government Or Private Industry” And “Establish A Timeline For The Resolution Of Fannie Mae And Freddie Mac.” (Marcellus Andrews, et al., Letter To Senators Reid and McConnell, 4/14/10)

Richmond Federal Reserve President Jeffrey Lacker: “It Provides Tremendous Discretion To The Treasury And FDIC To Use That [Resolution] Fund To Buy Assets From The Failed Firm, To Guarantee Liabilities Of The Failed Firm, To Buy Liabilities Of The Failed Firm. They Can Support Creditors In The Failed Firm … And If They Have The Discretion, They Are Likely To Be Forced To Use It In A Crisis.” (CNBC’s “The Call,” 4/6/10)

• Lacker: “In Fact, It Seems To Me That A Major Danger Is That There’s Going To Be More Instability In Financial Markets Rather Than Less.” (CNBC’s “The Call,” 4/6/10)
  
  
• Lacker: “The Issue Of Our Time Has To Do With The Government Safety Net For Financial Firms, And It’s Grown Tremendously. And Containing That, Establishing Clear Boundaries: That Is The Number One Priority. As I Read The Dodd Bill And The Mechanism It Sets Up For The Resolution Authority, It Doesn’t Strike Me That It’s Likely To Help Us There. (CNBC’s “The Call,” 4/6/10)

Rep. Brad Sherman (D-CA): “There Are Serious Problems With The Dodd Bill. The Dodd Bill Has Unlimited Executive Bailout Authority. That’s Something Wall Street Desparately Wants But Doesn’t Dare Ask For. The Bill Contains Permanent, Unlimited Bailout Authority.” (Rep. Brad Sherman, “Interview With Politico’s David Mark,” Poltico’s “Arena,” 4/19/10)

Sen. Ted Kaufman (D-DE): Under Current Legislation, “The Taxpayer Will Remain The Ultimate Guarantor.” (Sen. Ted Kaufman, Remarks on the Senate Floor, 3/26/10)

• Kaufman: “[T]here Is Little In The Current Legislation That Would Change The Behavior … Of The Nation’s Six Mega-Banks.” (Sen. Ted Kaufman, Remarks on the Senate Floor, 3/26/10)

The Washington Post’s Editorial Board: “To The Extent That This Establishes A Permanent Category Of Systemically Important – ‘Too Big To Fail’ -- Firms, Along With A Means To Wind Them Up, Mr. McConnell Is Partly Right.” (Editorial, “Partisan Schisms Aside, Financial Regulatory Reform Must Get Done,” The Washington Post, 4/16/10)

National Journal: “Under The Dodd Plan, Although The Senator Denies It, Many Big Financial Firms Would Indeed Be Declared Too Big To Fail.” (Clive Crook, “Dodd Misses The Point Of Financial Reform,” The National Journal, 3/20/10)

Federal Trade Commission: “As Drafted, The Senate Bill Could Even Inhibit The FTC’s Authority With Respect To Nonfinancial Products And Services. In Light Of This, We Fear That The Overall Result Could Be Less Protection For Consumers, And Fewer ‘Cops On The Beat.’” (Federal Trade Commission, Letter To Sen. Hutchison, 4/16/10)

SEC Commissioner Troy Paredes: “There Are No Clear Limits On The Degree Of Government Intervention That Could Be Expected.” (Commissioner Troy A. Paredes, Remarks at Midwest SIFMA & St. Louis Regional Chamber and Growth Association Luncheon, St. Louis, MO, 3/24/10)

Liberal Economist Simon Johnson: “The Resolution Authority Will Not End ‘Too Big To Fail’ For Large Complex Cross-Border Financial Institutions.  It Simply Will Not …” (Simon Johnson, “Senator McConnell Is Wrong, Senator Kaufman Is Right. Any Questions?” Baseline Scenario, 4/14/10)

Carnegie Mellon Economist Allan Meltzer: “Setting Up An Agency To Prevent Systemic Risk, As Mr. Dodd Has Just Proposed, Is Just Another Way To Pick The Public's Purse.” (Allan H. Meltzer, Op-Ed, “Market Failure Or Government Failure?” The Wall Street Journal, 3/18/10)

Economist Peter J. Wallison And UPenn Law Professor David Skeel: “The Dodd Bill Provides For A $50 Billion Fund … In Other Words, The Creditors Of Any Company That Is Resolved Under The Dodd Bill Have A Chance To Be Bailed Out.” (Peter J. Wallison and David Skeel, Op-Ed, “The Dodd Bill: Bailouts Forever,” The Wall Street Journal, 4/7/10)

• Wallison And Skeel: “The Bill Institutionalizes ‘Too Big To Fail.’” (Peter J. Wallison and David Skeel, Op-Ed, “The Dodd Bill: Bailouts Forever,” The Wall Street Journal, 4/7/10)