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Democrats Vote For A Permanent Bailout Fund, Expand Government Guarantee On The Financial Market

WASHINGTON, Nov 17 -

Republican Substitute Offers An Exit Strategy From Taxpayer Bailouts

November 17, 2009

-During consideration of the Financial Stability Improvement Act of 2009, Democrats on the Financial Services Committee voted against an amendment that would end taxpayer-funded bailouts of failed non-bank financial firms.

The amendment, offered by Rep. Shelley Moore Capito (R-WV) and supported by Committee Republicans, would protect taxpayers from future bailouts by creating a new chapter of the bankruptcy code to make it more efficient and better suited for resolving large non-bank financial institutions.  Bankruptcy is considered a fair, transparent and non-politicized way to resolve and liquidate large, complex institutions. 

Rep. Mel Watt (D-NC) confirmed that the Democrats' bill maintains the bailout status quo when he stated during debate on the Capito amendment:  "When you get down to an absolute day to day practical level, [prohibiting any new bailouts] makes absolutely no sense."

The Capito amendment is based on provisions contained in H.R. 3310, comprehensive regulatory reform legislation introduced by Financial Services Committee Republicans in July. Click here for more information about H.R. 3310, the Consumer Protection and Regulatory Enhancement Act.

The amendment was defeated on a vote of 26 to 40. Click here for the vote tally.