Today, the House of Representatives is expected to begin debate on H.R. 4173, the Wall Street Reform and Consumer Protection Act of 2009, which is the House’s effort to reform and update the country’s financial regulations. Prior to the bill even coming to the floor, Republicans are joining with the financial services industry in an attempt to scuttle it.
As Roll Call reported, “in a call to arms, House Republican leaders met with more than 100 lobbyists…on Tuesday afternoon to try to fight back against financial regulatory overhaul legislation.” According to a lobbyist who attended the meeting, “the message was [House Financial Services Chairman Barney] Frank and the Democratic majority are ruining America, ruining capitalism, and stand up for yourselves…[The lobbyists] said, ‘Look, you all oppose this bill, but only a few of you have come out publicly.’”
And the message seems to have taken hold, as Rep. Spencer Bachus (R-AL), the ranking member on the House Financial Services Committee, appeared on C-Span this morning to criticize H.R. 4173 as a job-killing assault on American freedom. He made it clear that the GOP is out to defend big banks as, when asked what Republicans would do differently, the first thing that came to Bachus’ mind was ditching the Democratic proposal to levy a “too big to fail” tax on giant financial institutions, in order to build a fund that would be used to unwind failing financial companies without taxpayer dollars:
The first thing, we don’t impose a tax. The Democratic plan imposes a bailout tax. It’s a $150 billion tax on large corporations in this country. $150 billion out of our economy right now is going to cost jobs. We don’t tax corporations in the event that other corporations, their competitors fail.
Notice Bachus’ sneaky substitution of “corporation” for “financial institution,” to make it seem as if lots of businesses would be subject to the tax. But let’s be clear: Google, Home Depot, and Boeing are not going to be paying into what is officially known as the Systemic Dissolution Fund. According to the legislative language, the levy is restricted to financial institutions with more than $50 billion in assets and hedge funds with more than $10 billion in assets.
The point of building up this fund is to ensure that, when a large, interconnected financial institution does go under, there is a pot of money — provided by the financial industry itself — with which to unwind the failing institution in an orderly way. As Frank has said, the point of this provision is to create a “death panel for banks,” ensuring that sick institutions don’t cling to life at taxpayer expense. But instead, Bachus and the GOP want to keep the big banks from paying for the cost of their failure.