Sen. Susan Collins (R-ME) understands that the Dodd Financial Reform bill they are trying to ram through the Senate is a bailout. She has publically opposed the legislation. But that hasn’t stopped the Administration from pressuring her to change her mind.
The Wall Street Journal reports that Treasury Secretary Tim Geithner will be meeting with Sen. Collins to try to get her to see a different version of reality.
But, the American Enterprise Institute’s Peter Wallison says that not only is the bill a bailout but it would benefit Goldman Sachs” “That act–paying off the creditors when the government takes over a failing firm–is a bailout. It doesn’t matter that the management lose their jobs, or that the shareholders get nothing. When the creditors are aware that they will get a better deal with the failure of a large company than they will get with a small one that goes the ordinary route to bankruptcy, that is a bailout.”
To top it off, the fees for the Dodd bill’s resolution fund that would pay off a failing firm’s creditors would come not just from banks but from a broad array of Main Street businesses. Stable life, auto and home insurance companies would have to pay into this fund to subsidize the failure of the next high-roller, and the fees they pay would likely be passed on in the premiums their policy holders pay. And the bill’s definition of “nonbank financial company” is so broad that it could cover manufacturers only tangentially involved in extending credit, such as those that lease equipment to their customers. This would raise prices and cost Main Street jobs.
All in all, the Goldman indictment should serve as a wakeup call to those who want to ram a bill through Congress without looking at who both its victims and beneficiaries would ultimately be.
Senator Collins should know that the public isn’t fooled and she shouldn’t be either. Senator Collins’ phone number is 202-224-2523.