Beck falsely claims financial reform bill would let government shut down Fox News

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Glenn Beck falsely claimed that under current financial regulatory reform legislation, the government can "grab" companies it thinks are "a danger to the nation," including Fox News and Clear Channel. However, the bill would allow the government to seize banks and "nonbank financial" institutions -- not "any company," as co-host Pat Gray put it -- only if they "pose a significant risk to the financial stability of the United States."

Beck's claim: Under financial bill, Fox News, Clear Channel could be taken over

Beck, Gray falsely claim bill would let government take over non-financial institutions. On his radio show, Beck stated that while "Obama did inherit a bad situation," "he has made it 1,000 times worse and created a situation to where the state can grab power like crazy." He then pointed to the financial reform bill as an example of government's "frightening" power, saying that under the bill, "they can grab companies" that "they think" are "a danger to the nation." Gray added: "[T]hat's any company that they deem big enough to harm the economy, they can take control over."

From the June 25 broadcast of Premiere Radio Networks' The Glenn Beck Program:

BECK: Yeah, Barack Obama did inherit a bad situation. Now, what has he done with that situation? He has made it 1,000 times worse and created a situation to where the state can grab power like crazy. What is in this new financial bill, they can grab companies. They think that it is a danger to the nation? They can just grab it and shut you down. That's a little frightening with that power.

GRAY: And that's not companies who've taken stimulus, that's any company --

BECK: Any company.

GRAY: -- that they deem big enough to harm the economy --

BECK: Any company.

GRAY: -- they can take control over.

BECK: Now, let me ask you this. Could you say that Fox News?

GRAY: Yes.

BECK: You darn right you could.

GRAY: Yes.

BECK: Could you say that talk radio is?

GRAY: You bet.

BECK: Of course you can.

GRAY: You could take control of Clear Channel.

Bill applies specifically to banks and "nonbank financial" institutions

Bill applies to banks and "nonbank financial" institutions. Contrary to Beck's claim that media conglomerates Fox News and Clear Channel Communications, or even "talk radio," would be targets of the financial reform bill, according to the conference report of the Dodd-Frank Wall Street Reform and Consumer Protection Act, companies affected by the legislation include banks and "nonbank financial" institutions, which are defined as companies "predominantly engaged in financial activities," meaning that 85 percent of their revenues or assets are derived from financial activities. As Section 102 of the bill states:

(4) NONBANK FINANCIAL COMPANY DEFINITIONS. --

(A) FOREIGN NONBANK FINANCIAL COMPANY. -- The term ''foreign nonbank financial company'' means a company (other than a company that is, or is treated in the United States as, a bank holding company or a subsidiary thereof) that is --

(i) incorporated or organized in a country other than the United States; and

(ii) predominantly engaged in, including through a branch in the United States, financial activities, as defined in paragraph (6).

(B) U.S. NONBANK FINANCIAL COMPANY. -- The term ''U.S. nonbank financial company'' means a company (other than a bank holding company, a Farm Credit System institution chartered and subject to the provisions of the Farm Credit Act of 1971 (12 U.S.C. 2001 et seq.), or a national securities exchange (or parent thereof), clearing agency (or parent thereof, unless the parent is a bank holding company), security-based swap execution facility, or security-based swap data repository registered with the Commission, or a board of trade designated as a contract market (or parent thereof), or a derivatives clearing organization (or parent thereof, unless the parent is a bank holding company), swap execution facility or a swap data repository registered with the Commodity Futures Trading Commission), that is --

(i) incorporated or organized under the laws of the United States or any State; and

(ii) predominantly engaged in financial activities, as defined in paragraph (6).

(C) NONBANK FINANCIAL COMPANY. -- The term ''nonbank financial company'' means a U.S. nonbank financial company and a foreign nonbank financial company.

(D) NONBANK FINANCIAL COMPANY SUPERVISED BY THE BOARD OF GOVERNORS. -- The term ''nonbank financial company supervised by the Board of Governors'' means a nonbank financial company that the Council has determined under section 113 shall be supervised by the Board of Governors.

[...]

(6) PREDOMINANTLY ENGAGED. -- A company is ''predominantly engaged in financial activities'' if --

(A) the annual gross revenues derived by the company and all of its subsidiaries from activities that are financial in nature (as defined in section 4(k) of the Bank Holding Company Act of 1956) and, if applicable, from the ownership or control of one or more insured depository institutions, represents 85 percent or more of the consolidated annual gross revenues of the company; or

(B) the consolidated assets of the company and all of its subsidiaries related to activities that are financial in nature (as defined in section 4(k) of the Bank Holding Company Act of 1956) and, if applicable, related to the ownership or control of one or more insured depository institutions, represents 85 percent or more of the consolidated assets of the company.

The bill also applies to "insurance companies" and "insurance company subsidiaries" if they are a "covered financial company or a subsidiary or affiliate of a covered financial company."

Bill sets up Financial Stability Oversight Council to "identify risks to the financial stability" of U.S. that could arise from failing financial institutions. The legislation would set up an oversight council to "identify risks to the financial stability of the United States" and to "to respond to emerging threats to the stability of the United States financial markets," not target companies that are "a danger to the nation." Section 112 of the conference committee report states:

(1) IN GENERAL.-- The purposes of the Council are --

(A) to identify risks to the financial stability of the United States that could arise from the material financial distress or failure, or ongoing activities, of large, interconnected bank holding companies or nonbank financial companies, or that could arise outside the financial services marketplace;

(B) to promote market discipline, by eliminating expectations on the part of shareholders, creditors, and counterparties of such companies that the Government will shield them from losses in the event of failure; and

(C) to respond to emerging threats to the stability of the United States financial system.

(2) DUTIES.-- The Council shall, in accordance with this title--

(A) collect information from member agencies, other Federal and State financial regulatory agencies, the Federal Insurance Office and, if necessary to assess risks to the United States financial system, direct the Office of Financial Research to collect information from bank holding companies and nonbank financial companies;

(B) provide direction to, and request data and analyses from, the Office of Financial Research to support the work of the Council;

(C) monitor the financial services marketplace in order to identify potential threats to the financial stability of the United States;

(D) to monitor domestic and international financial regulatory proposals and developments, including insurance and accounting issues, and to advise Congress and make recommendations in such areas that will enhance the integrity, efficiency, competitiveness, and stability of the U.S. financial markets;

(E) facilitate information sharing and coordination among the member agencies and other Federal and State agencies regarding domestic financial services policy development, rulemaking, examinations, reporting requirements, and enforcement actions;

(F) recommend to the member agencies general supervisory priorities and principles reflecting the outcome of discussions among the member agencies;

(G) identify gaps in regulation that could pose risks to the financial stability of the United States;

(H) require supervision by the Board of Governors for nonbank financial companies that may pose risks to the financial stability of the United States in the event of their material financial distress or failure, or because of their activities pursuant to section 113.

Under Sec. 113, council would determine that a nonbank financial company be supervised if found to "pose a threat to the financial stability" of U.S. According to Section 113 of the bill, the council "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, or the nature, scope, size, scale, concentration, interconnectedness, or mix of the activities of the U.S. nonbank financial company, could pose a threat to the financial stability of the United States."

Bill would target financial institutions in default or in danger of default. The bill states that a company would be a target of liquidation, among other things, if it "is in default or in danger of default" and if "failure of the financial company and its resolution under otherwise applicable Federal or State law would have serious adverse effects on financial stability in the United States." The bill further states:

(4) DEFAULT OR IN DANGER OF DEFAULT.-- For purposes of this title, a financial company shall be considered to be in default or in danger of default if, as determined in accordance with subsection (b) --

(A) a case has been, or likely will promptly be, commenced with respect to the financial company under the Bankruptcy Code;

(B) the financial company has incurred, or is likely to incur, losses that will deplete all or substantially all of its capital, and there is no reasonable prospect for the company to avoid such depletion;

(C) the assets of the financial company are, or are likely to be, less than its obligations to creditors and others; or

(D) the financial company is, or is likely to be, unable to pay its obligations (other than those subject to a bona fide dispute) in the normal course of business.

Wash. Post: "The government would be given the power to seize and close down large failing" financial firms "in an orderly fashion." In a May 21 report, The Washington Post stated that under the bill, "the government would be given the power to seize and close down large failing" financial firms "in an orderly fashion, just as the Federal Deposit Insurance Corp. can shut down ordinary banks that run into trouble."

Posted In
Economy, Budget, Government, The Presidency & White House
Network/Outlet
Premiere Radio Networks
Person
Glenn Beck
Show/Publication
Glenn Beck Program
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