Obama’s Administration with Too Many Favors for Wall Street
The dirty little secret about the Obama administration's Wall Street reform bill is that it's full of favoritism for Wall Street. For instance, you may have heard about the new $50 billion financial support that would be used to wind down large financial firms that became bankrupt.
The fund would come from estimations on Wall Street banks, based on the standard that these 'too big to fail organizations' should pre-fund their own bailouts. But you most likely didn't know that these evaluations would count as tax-deductible business expenses, which means that for each dollar the banks would pay into the fund, 35 cents would come out of the Treasury.
For each measure that would slash into Wall Street's proceeds, another would provide financial backing to its operations. New policies governing plagiaristic approach would cut into the fees that investment banks could charge, for structuring these customized products.
But the bailout authority that has been awarded to the FDIC and the Federal Reserve would permit the banks to have a loan at reduced rates, with their creditors secure in the knowledge that the Government would step in if the market lost its balance.
Supporters of the Chris Dodd bill have objected to the expression "bailout fund", disagreeing that the fund would be sharply constrained to liquidations, not bailouts.
They stated while arguing that they do not quarrel by saying that the U. S. needs a better resolution system for large non-bank financial firms. Insolvency did not appear to work well in resolving Lehman Brothers, though the heavy Government interference in monetary markets both before and after it failed assure of the safety.
The Government has now set the example that it will step in to save large firms from failing or to ease the consequences of their failure by providing them support.