Senate passes financial reform bill amendment

US Capitol Building

The U.S. Capitol Building. Image from Wikimedia Commons.

An amendment to the financial reform bill, which has been in the spotlight lately, has passed the Senate by an incredibly wide margin.  Included in the amendment are protections that preclude taxpayers from bearing the brunt of the expense of helping huge firms that go down in flames. The amendment to the bill passed 93 to 5, which means the changes made to the bill are things both parties are satisfied with Usually, the only bill that passes that quick is a vote to give legislators more payday cash.

Financial reform bill amendment passes Senate

The Senate voted 93 to 5 for the financial reform bill amendment, and lawmakers spent weeks collaborating to come up with regulations that made both sides of the aisle happy.  The amendment, according to CNN, was co-written by Sen. Chris Dodd (D-CT) and Sen. Richard Shelby (R-AL), and only five Senators didn’t vote for it, 2 of which didn’t vote at all.

Too big to pay for

One of the changes that the amendment to the financial reform bill makes is that it places a tax on banks if any bank were to fail in the spectacular manner as several did during the Wall Street collapse.  The previous version would have taxed banks to create a $50 billion emergency fund for failing banks.  The new version still places the burden on investment banks if anyone of their number should fail as badly as they did in this last recession.

Regulatory reforms

There are numerous impacts the financial reform bill amendment would make. The new bi-partisan version of the bill allows the Federal Reserve to lend only to banks that need credit, but otherwise aren’t insolvent.  The FDIC would have to get Congressional approval before paying or guaranteeing any bank debts.  The amendment would also ban from the industry any bank executive or director who engages in illegal or otherwise illicit activity. Also included are new rules that would allow the government to recoup any over-payments on bank debt. In other words, say the government assists a failing bank, but pays a creditor more than they would receive in a bankruptcy.  The government would get the remainder back.

So far, so good, but so what?

At this moment, it’s only an amendment to a bill.  The financial reform bill is not close to passing yet, and it will be weeks before it’s ready to go to the House, never mind the President’s desk. The financial reform bill still has a long road ahead of it.

Other recent posts by bryanh