'Countrywide' Chris Dodd Proposes Blank Check to Bailout Big Banks

It’s not often that we can give credit to Barney Frank but when it comes to the issue of Financial Reform at least we can say is he was honest enough to put a price tag on the proposed permanent bailout fund. Can’t say the same for Sen. Chris Dodd.

The Frank bill’s price tag for future bailouts was clear — $4 trillion.

Sen. Dodd’s bill proposes the same bailout authority but makes matters even worse — he leaves the check blank. Taxpayers will be on the hook for any amount.

Dodd’s bill gives the Fed “emergency lending authority” to “any ” entity or market utility, program or facility that the Financial Stability Oversight Council determines is or is likely to become “systemically important.”

But don’t worry. They have to report back to Congress why they used this authority within seven days after they use it. But– they only have to disclose who they helped “within one year” and only if they deem that it won’t hurt the “effectiveness of the program”

Still thinking maybe this isn’t a bailout? Well, on page 1306, one of the requirements is that the Fed has to report to Congress ” the expected or final cost to the taxpayers of such assistance.”

So, to summarize–the Fed has authority to lend money to any entity it deems fit, in any amount it sees fit but has to report after the fact how much it cost the taxpayers but they only have to tell you who they gave it to if they want to.

If that doesn’t sound like a bailout to you, then I’m selling some oceanfront property in Arizona that I’d like to talk to you about.

Republicans on the Senate Banking Committee have made it clear they are trolling for a deal on this issue. But for all the hand wringing, technical talk and political doublespeak on this issue it boils down to two simple yet distinct paths for dealing with failing companies–bailout or bankruptcy. Either the taxpayers are on the hook to spend money on these companies or they are not.

Dodd’s bill clearly puts taxpayers on the hook. So any sort of compromise that involves “emergency lending authority” is merely negotiating the terms, size or scope of the bailout and any vote for this bill or its negotiated cousin is a vote in favor of bailouts.

Hopefully the Republicans on the Senate Banking Committee can see that.