Yesterday, Rep. Spencer Bachus (R-AL) appeared on C-Span and laid out his main reason for opposing H.R. 4173, the Wall Street Reform and Consumer Protection Act of 2009, which is the regulatory reform legislation that the House has begun to debate. Evidently, Bachus has a problem with the proposal to implement a “too big to fail” tax on financial giants, which would build a fund that would be tapped in the event that a large financial institution fails and needs to be unwound.

This fund (officially known as the Systemic Dissolution Fund) is meant to ensure that taxpayers stay out of the bailout business, by providing a pool of money — put up by the Wall Street behemoths themselves — that would be used to facilitate the orderly dismantling of a failed institution. This would correct for some of the problems that arose when AIG and Citigroup got into trouble (and to head off the sort of chaotic collapse exhibited by Lehman Brothers).

Republicans though, made it clear on the House floor that their opposition will be based on calling the fund “permanent TARP” and a “permanent bailout fund,” while falsely claiming that taxpayers and non-financial companies will have to pay for it. Watch a compilation:

Unless the “schoolteachers in Mesquite, Texas” that Rep. Jeb Hensarling (R-TX) referenced have more than $50 billion in assets and have taken to hawking credit default swaps in the cafeteria, this tax will not affect them. And as far as the levy hitting “small businesses,” unless Goldman Sachs is now a small business in the eyes of the GOP, there is no truth to this.

Instead of enshrining bailouts, the bill quite clearly stipulates on page 397 that the dissolution fund can only be used “to facilitate and provide for the orderly and complete dissolution of any failed financial company or companies that pose a systemic threat to the financial markets or economy.” The fund cannot be employed to turn companies into zombies like Citigroup, which is wise, as Treasury is still struggling with how to dispose of Citi.

As Rep. Ed Perlmutter (D-CO) said on the floor in response to the GOP’s rhetoric, “there is no bailout. As much as my friends on the other side of the aisle would like to be on message and continue to repeat that, there is no bailout.” Though they dress it up in populist language, the GOP is endorsing the regulatory approach that led to AIG’s repeated infusions of taxpayer money and the market shock that was felt in the wake of Lehman Brothers’ collapse. But what more should we expect from the party that is huddling with financial services lobbyists to decide how to best kill regulatory reform?

Last night, after a dust-up between the New Democrats and House Financial Services Chairman Barney Frank (D-MA), the House of Representatives agreed on the rules for debate of H.R. 4173, the Wall Street Reform and Consumer Protection Act of 2009. The 253-177 vote (with all Republicans voting against) frees the bill up to come to the floor.

One results of the New Dems’ obstinance is the addition to the bill of a provision that would “broaden proposed powers of the Office of the Comptroller of the Currency to preempt state consumer protection laws for national banks” by lowering the threshold for preemption and allowing the OCC to apply its previous preemption decisions in new cases (instead of on a literal case-by-case basis). This is a troubling development.

The second concession wrung by the New Dems is to bring an amendment scrapping the proposed Consumer Financial Protection Agency (CFPA) to the floor. The CFPA is one of the most important facets of regulatory reform, and has been the target of an intense lobbying campaign from the Chamber of Commerce and the financial services industry, in cooperation with Republicans.

In a preview of what debate over the CFPA is liable to look like, Reps. Don Manzullo (R-IL) and Judy Biggert (R-IL) took to the House floor last night to claim that the CFPA’s powers will enable it to regulate churches, doctors, people writing checks for their mothers, and cockroach inspectors. Watch a compilation:

This strategy takes the Chamber of Commerce’s already ludicrous campaign claiming that the CFPA would regulate bakeries and grocery stores a step further. Of course, this effort is seriously undermined by Sec. 4205 of the actual legislation (pg. 760-762) which clearly lays out the “exclusion for merchants, retailers, and sellers of nonfinancial services”:

And thanks to the deal struck by the New Democrats, which called into question the necessity of the CFPA, we can look forward to much more of this nonsensical rhetoric as debate progresses.