Pushing a false Republican talking point, Fox Business Network's Eric Bolling claimed that Democrats' financial reform bill includes "a $50 billion slush fund so that if a firm, company is too big to fail, maybe they can tap into that and maybe not allow it to fail." In fact, the "orderly liquidation fund," which would be paid for by financial institutions, would be used to dismantle a failing firm and "is anything but a bailout," in the words of Republican Sen. Bob Corker.
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Bolling claims "$50 billion slush fund" is "bailout" to keep companies from failing
From the April 20 edition of Fox News' Happening Now:
BOLLING: No Jon [Scott], the Republicans don't not [want to] reform just like they didn't not want health care reform. They just don't want a sweeping as as over-encompassing and just massive reform that the Democrats are proposing. Look what they want to do. They want to create a 50 billion - right now they have in the bill a $50 billion slush fund so that if a firm, company is too big to fail, maybe they can tap into that and maybe not allow it to fail. Republicans say, you know what, there's nothing too big to fail anymore, we tried that, we tried the bailouts. It didn't create jobs. Let's not go up that road again. Let's get rid of that $50 billion fund.
FACT: Liquidation fund "cannot be used to keep faltering institutions alive"
PolitiFact.com: "[T]he bill makes it clear that the money must be used to liquidate -- not keep alive -- failing firms." In an analysis of Republican claims that the legislation establishes a $50 billion fund for future bailouts, PolitiFact called the claim "false" and stated, "The legislative language is pretty clear that the money must be used to dissolve -- meaning completely shut down -- failing firms." PolitiFact further stated, "The fund cannot be used to keep faltering institutions alive."
$50 billion fund would not be financed with taxpayer dollars. As the New York Times reported, "[t]he bill would stop taxpayer-financed bailouts. If a company was on the verge of collapse, leading firms in the financial services industry would have to pay to clean up the mess." The "largest financial companies" would be charged to supply the $50 billion liquidation fund.
Corker: "[T]his fund that's been set up is anything but a bailout." As the Wonk Room noted, Republican Sen. Bob Corker, who does not support Dodd's bill, rebutted the claim that the liquidation fund is a "bailout," stating, "this fund that's been set up is anything but a bailout. It's been set up to, in essence, provide upfront funding by the industry so that when these companies are seized, there's money available to make payroll and to wind it down while the pieces are being sold off."
Klein: "[T]he $50 billion isn't there to save banks. It's there to liquidate them." Ezra Klein of the Washington Post wrote on April 20 that the $50 billion fund "isn't there to save banks. It's there to liquidate them." Klein added:
Here's the chain of events: A bank is judged failing. The FDIC submits a plan for the bank's liquidation -- which includes firing management, wiping out shareholders, handing losses to creditors, and selling off the firm -- and gets it approved by the Treasury secretary. Then the FDIC takes over the banks. The $50 billion fund is used to keep the lights on while all this happens. It's there to prevent taxpayers from having to foot the bill for the chaos that will occur between when we recognize a bank is failing and when we shut it down.
Whatever you want to call this, it isn't a bailout. It's the death of the company. And the fund is way of forcing too-big-to-fail banks to pay for the execution.