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As we continue to work toward reforming Wall Street and making it accountable, we’re going to see the usual suspects try to misrepresent the legislation.
These same opponents of reform are pushing for loopholes and carve-outs in the bill large enough to drive a truck through.
The reality is that there’s a clear choice in this debate: to stand with American families or stand on the side of the big Wall Street banks and their lobbyists who are defending the status quo. Opponents of reform are protecting the big banks at the expense of American families -- so they’re going to do whatever they can to keep the present system in place and leave the American taxpayer with the bill.
One false criticism we’re hearing is this: that the Senate bill will allow endless taxpayer-funded bailouts of financial firms. What they won’t tell you is that they are taking their marching orders from a partisan political consultant who has told them that the best way to oppose real reform is to link it to the bank bailouts. In fact, the polling memo they’re working from explicitly states that “the best way to kill any legislation is to link it to the Big Bank Bailout.” No matter what the bill actually does, they’re going to call it a bailout because that’s what the polls tell them to do.
Here are the facts: this bill does the exact opposite of what these critics say it does. The Senate bill explicitly mandates that a large financial firm that faces failure will be allowed to fail, and it explicitly prohibits the use of any funds to “bail out” a failing firm. Under the Senate bill, large financial firms facing insolvency in times of crisis will be shut down or broken apart. Management will be replaced. Creditors will suffer losses. Equity holders will be wiped out. And large financial firms, not taxpayers, will be required to bear the costs. Under the Senate bill, the taxpayers will never be asked to foot the bill for Wall Street’s irresponsibility.
President Obama has been committed to enacting real Wall Street reform since well before taking office, and he believes that momentum is on the side of greater accountability for Wall Street and strong protections for consumers. The idea that we would walk away learning no lessons from this financial crisis – after over 8 million Americans lost their jobs and trillions in household wealth disappeared – is simply unacceptable. It’s time to set new rules of the road to fix the behavior that led to this crisis, because the American people have suffered too much to enact reform that does too little. Inaction is simply not an option.
Jen Psaki is Deputy Communications Director