Research

This morning on MSNBC’s “Morning Joe,” Austan Goolsbee, a member of Obama’s Council of Economic Advisors, declared that the Obama-Dodd financial regulation bill outlawed bailouts:

The thing is, it's crazy. I'm sure that if i call up the staff from Senator McConnell's office and show them where it outlaws bailouts … They'll stop saying that once they determine that it is specifically outlawed in the bill.

We suggest that Goolsbee read the bill because it does in fact continue bailouts. The language in the bill is very clear:

• On page 35, a new “Financial Oversight Council” would determine which firms are “too big to fail”: “The Council, on a non-delegable basis and by a vote of not fewer than 2⁄3of the members then serving, including an affirmative vote by the Chairperson, may determine that a U.S. nonbank financial company shall be supervised by the Board of Governors and shall be subject to prudential standards, in accordance with this title, if the Council determines that material financial distress at the U.S. nonbank financial company would pose a threat to the financial stability of the United States.

• On page 245, the FDIC can bail out creditors of failed firms: “ADDITIONAL PAYMENTS AUTHORIZED. (A) IN GENERAL.—Subject to subsection11 (o)(1)(E)(ii), the Corporation, with the approval  of the Secretary, may make additional payments or credit additional amounts to or with respect to or for the account of any claimant or category of claimants of the covered financial company.”

• On page 277, a $50 billion bailout fund is created: “There is established in the Treasury of the United States a separate fund to be known as the Orderly Liquidation Fund which shall be available to the Corporation to carry out the authorities contained in this title … The target size of the Fund (in this section referred to as ‘‘target size’’ shall be $50,000,000,000, adjusted for inflation on a periodic basis by the Corporation.”

• On page 1365, the Federal Reserve’s emergency lending power is expanded: “The third undesignated paragraph of section 13 of the Federal Reserve Act (12 U.S.C. 343) (relating to emergency lending authority) is amended (1) by inserting ‘(3)(A)’ before ‘In unusual’ (2) by striking ‘individual, partnership, or corporation’ the first place that term appears and inserting the following: ‘participant in any program or facility with broad-based eligibility.’”

• On page 1379, the Federal Reserve and the FDIC can use taxpayer money to guarantee the debt of banks: “IN GENERAL.—Upon the written determination of the Corporation and the Board of Governors under section 1154, the Corporation shall create a widely available program to guarantee obligations of solvent insured depository institutions or solvent depository institution holding companies…”

So you see, Mr. Goolsbee, Republicans have read the bill and have every right to be concerned about future bailouts. You might want to take another look.