9. Are you concerned that the government will bail
out (again) banks that it thinks are "too big to fail"?
Yes No
One of the greatest disappointments of Dodd-Frank is that for all the impact it has on factors that played no role in the financial crisis, it does not end - and, in fact, makes worse - the concept that the largest financial institutions are "too big to fail". For all of the chest thumping of its supporters that Dodd-Frank ends bailouts, it actually enshrines AIG-style bailouts into law.

Dodd-Frank gives the Federal Deposit Insurance Corporation the authority to lend to a failing firm; purchase its assets; guarantee its obligations; and pay off its creditors. This so-called "resolution authority" is the same bailout tool that was used to bail out the creditors of Bear Stearns, AIG, Fannie Mae and Freddie Mac, and that was used to bail out Citigroup, Bank of America, GM and Chrysler. Under Dodd-Frank, the FDIC can borrow from the Treasury (a.k.a. the taxpayers) up to 10% of the book value of the failed firm's total consolidated assets in the 30 days immediately following the FDIC's appointment as receiver. After those 30 days, the FDIC can borrow up to 90% (again from the taxpayers) of the fair value of the failed firm's total consolidated assets.

As Stephen J. Lubben, a legal professor at Seton Hall University testified, "[Dodd-Frank's liquidation authority] is primarily achieved by virtue of the FDIC's ability to provide ongoing liquidity to the financial institution, which many would consider a form of bailout of the financial institution's counterparties." Nicole Gelinas, who wrote a book on the financial crisis, explained, "In essence, Dodd-Frank codifies into law the government's practice of picking and favoring firms that are "too big to fail." The companies that succeed will be not those chosen by the market but those chosen by politicians and regulators."

Last year, the Special Inspector General for the Troubled Asset Relief Program (SIGTARP) released a report that includes comments from Treasury Secretary Timothy Geithner admitting that - contrary to Democrats' claims -- future bailouts are still possible:
"In the future we may have to do exceptional things again if we face a shock that large. You just don't know what's systemic and what's not until you know the nature of the shock. It depends on the state of the world - how deep the recession is."
In the report, the SIGTARP writes: "It was apparent to SIGTARP from the context of the interview, including the reference to doing something exceptional 'again' in the face of a future financial crisis, that Secretary Geithner was referring to the possibility of future bailouts...Secretary Geithner's candor about the difficulty of determining 'what's systemic and what's not until you know the nature of the shock,' and the prospect of having to 'do exceptional things again' in such an unknowable future crisis is commendable. At the same time, it underscores a TARP legacy, the moral hazard associated with the continued existence of institutions that remain 'too big to fail.'"

Who is ultimately left paying for these new expenses? You, not Wall Street.
One of the greatest disappointments of Dodd-Frank is that for all the impact it has on factors that played no role in the financial crisis, it does not end - and, in fact, makes worse - the concept that the largest financial institutions are "too big to fail". For all of the chest thumping of its supporters that Dodd-Frank ends bailouts, it actually enshrines AIG-style bailouts into law.

Dodd-Frank gives the Federal Deposit Insurance Corporation the authority to lend to a failing firm; purchase its assets; guarantee its obligations; and pay off its creditors. This so-called "resolution authority" is the same bailout tool that was used to bail out the creditors of Bear Stearns, AIG, Fannie Mae and Freddie Mac, and that was used to bail out Citigroup, Bank of America, GM and Chrysler. Under Dodd-Frank, the FDIC can borrow from the Treasury (a.k.a. the taxpayers) up to 10% of the book value of the failed firm's total consolidated assets in the 30 days immediately following the FDIC's appointment as receiver. After those 30 days, the FDIC can borrow up to 90% (again from the taxpayers) of the fair value of the failed firm's total consolidated assets.

As Stephen J. Lubben, a legal professor at Seton Hall University testified, "[Dodd-Frank's liquidation authority] is primarily achieved by virtue of the FDIC's ability to provide ongoing liquidity to the financial institution, which many would consider a form of bailout of the financial institution's counterparties." Nicole Gelinas, who wrote a book on the financial crisis, explained, "In essence, Dodd-Frank codifies into law the government's practice of picking and favoring firms that are "too big to fail." The companies that succeed will be not those chosen by the market but those chosen by politicians and regulators."

Last year, the Special Inspector General for the Troubled Asset Relief Program (SIGTARP) released a report that includes comments from Treasury Secretary Timothy Geithner admitting that - contrary to Democrats' claims -- future bailouts are still possible:
"In the future we may have to do exceptional things again if we face a shock that large. You just don't know what's systemic and what's not until you know the nature of the shock. It depends on the state of the world - how deep the recession is."
In the report, the SIGTARP writes: "It was apparent to SIGTARP from the context of the interview, including the reference to doing something exceptional 'again' in the face of a future financial crisis, that Secretary Geithner was referring to the possibility of future bailouts...Secretary Geithner's candor about the difficulty of determining 'what's systemic and what's not until you know the nature of the shock,' and the prospect of having to 'do exceptional things again' in such an unknowable future crisis is commendable. At the same time, it underscores a TARP legacy, the moral hazard associated with the continued existence of institutions that remain 'too big to fail.'"

Who is ultimately left paying for these new expenses? You, not Wall Street.