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house Bill H.R. 4894

Should the Feds Not Have the Ability to Liquidate Failing Financial Firms?

Argument in favor

The FDIC shouldn’t be able to choose which failing financial institutions are in need of liquidation and bail them out with taxpayer dollars. This bill takes that option away from the FDIC.

Loraki's Opinion
···
10/03/2016
No more Dodd-Frank! Enough with the crony capitalism! The Dodd-Frank Act "is categorized into sixteen titles and, by one law firm's count, it requires that regulators create 243 rules, conduct 67 studies, and issue 22 periodic reports. [Ostensibly, the aim] of the legislation is: To promote the financial stability of the United States by improving accountability and transparency in the financial system, to end "too big to fail", to protect the American taxpayer by ending bailouts, to protect consumers from abusive financial services practices, and for other purposes. On July 12, 2012, the Competitive Enterprise Institute joined the State National Bank of Big Spring, Texas, and the 60 Plus Association as plaintiffs in a lawsuit filed in the U.S. District Court for the District of Columbia, challenging the constitutionality of provisions of Dodd–Frank. The complaint asked the court to invalidate the law, arguing that it gives the federal government unprecedented, unchecked power. The lawsuit was amended on September 20, 2012, to include the states of Oklahoma, South Carolina, and Michigan as plaintiffs. The states asked the court to review the constitutionality of the Orderly Liquidation Authority established under Title II of Dodd–Frank. In February 2013 Kansas Attorney General Derek Schmidt announced that Kansas along with Alabama, Georgia, Ohio, Oklahoma, Nebraska, Michigan, Montana, South Carolina, Texas and West Virginia would join the lawsuit. The second amended complaint included those new states as plaintiffs. On August 1, 2013, U.S. District Judge Ellen Segal Huvelle dismissed the lawsuit for lack of standing. In July 2015, the Court of Appeals for the District of Columbia Circuit affirmed in part and reversed in part, holding that the bank, but not the states that later joined the lawsuit, had standing to challenge the law, and returned the case to Huvelle for further proceedings. https://en.m.wikipedia.org/wiki/Dodd–Frank_Wall_Street_Reform_and_Consumer_Protection_Act#Overview?wprov=sfsi1 The FDIC shouldn’t be able to choose which failing financial institutions are in need of liquidation and bail them out with taxpayer dollars. This bill takes that option away from the FDIC. Rep. Randy Neugebauer (R-TX) explained why House Republicans object to the “orderly liquidation authority” that the FDIC is granted under Title II of Dodd-Frank during committee debate over this bill: “What Title II is, is a parachute clause… Just in case we get it wrong again like we did in 2008, we have got this little provision here that we can bail out these entities again. Eliminating Title II basically does eliminate the taxpayers from having to be on the forefront… because it takes away an important funding process.” What Is Crony Capitalism? Crony capitalism and genuine capitalism, if not opposites, are fundamentally opposed. Unfortunately the broader public, to date, is largely unaware of this. Crony capitalism is the marriage of the state and private special interests. Some people have called it corporatism, mercantilism, fascism, or even Communism. We will call it crony capitalism. By whatever name, it is phony capitalism. Over the years the public has been taught that many of the problems it faces on a day to day basis such as the lack of jobs, rising prices, corruption in Congress, and so on are a result of capitalism. If so, it is a perverted capitalism. These unsavory realities are largely the result of government/private “partnerships.” Whether in banking, agriculture, housing, energy, transportation, manufacturing, or nearly any other facet of the economy, the “unsavory” parts are often the result of public/private collusion. Why can’t you get any kind of return on your money in a CD, the traditional vehicle for retirees? Crony capitalism. Why can Goldman Sachs, the largest investment bank, speculate in markets using newly printed government money that has been borrowed virtually for free? Crony Capitalism. Why is Detroit a shadow, barely a shadow, of what it once was? Crony capitalism. Why are there more farm regulators than farmers? Crony capitalism. Why does Congress write laws that are longer than the Old Testament with obscure, impossible to understand language? Crony capitalism. When the state and powerful private interests collude the result is a cocktail of market distortion. Genuine capitalism in comparison, is quite simple. Capital is invested by individuals to further ideas and enterprises that the investor thinks will create a return on the money invested. If the enterprise in question is a good one, both investor and business owner win. If not- better luck next time. It’s clear. It’s simple. It’s moral. However, invariably once the state gets involved as investor, or “regulator”, things start to morph and twist. As sure as the sun rises, coercion and corruption rear their heads. Crony capitalism can take many forms including regulatory capture ( regulated interests actually using government power to squelch competition), zoning, licensing, in some cases even copyright, and hundreds of other ways. The one thing all of these “tools” have in common, however, is that they are used by the politically connected few to extract money and power from the unconnected many. Government gives a veil of legitimacy to actions taken by individuals and groups that would be considered unethical (at best) without government “permission.” More often government also uses its power to make everyone play along. If you break a law, you can go to jail. http://www.againstcronycapitalism.org/what-is-crony-capitalism/
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···
10/03/2016
This bill does not undermine Dodd-Frank (not that I would mind if it did, but it simply doesn't), and it certainly doesn't undermine the financial system. It's repealing the part of the FDIC that guarantees creditors in the event of the bank going bankrupt. It's repealing the part of the act that makes banks a risk-free investment. The market distortion would be leaving that in place, not repealing it. What this legislation is restoring is that (1) there's no such thing as a risk free investment, and (2) saving your money in a bank is making an investment. Banks are not sure things. Having the article in question in place has caused people to act like they are and so banks have raked in cash that they can then loan out with abandon because if it all goes wrong they're not on the hook for making sure people get their money back. In the absence of that article (i.e., with the passage of this) banks will need to formulate much safer portfolios of investments and mortgages in order to convince people to save their money with the bank. You take this safety net out of Dodd-Frank and the free market will naturally push the banks to become safer. Leaving it in place is in fact what is distorting the financial market.
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prolender1's Opinion
···
10/03/2016
It's over regulation & the delusional notion that the direct involvement of "alphabet agencies" can "HELP"...that's holding up Equities right now (in 2016)!
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Argument opposed

This bill undermines the Dodd-Frank Act and the stability of the financial system by getting rid of an important mechanism that allows failing megabanks to be efficiently liquidated.

M's Opinion
···
10/03/2016
What happen to the Roosevelt laws that keep bankers in check. As if i robbed the american people i would be jailed. What makes the bankers ( all of then , from top down) who robbed the american people during the bush/ cheney rapping, which is why obama had to hoc our country to the fed res ( $20 trill? ) WAKE UP AMERICA, stop the madness, when your leaders r puppets to the money changers( the rulers) we become serfs, and accomplesses to their thieving, murderess ways, when ur gov is crooked, r u bot inspired to be ? WAKE UP, ur in a nightmare, if u stay asleep it will only continue to get worse, is this the american dream of ur mother&father's, his mother&father's..., the dream u want for ur children, thier children..., to be slaves to the 1%??? Stand up for ur fellow american, what is happening to them could soon be at ur door? T BANKER SHOULD BE SENT TO A FEDERAL MAX, for he does more to starve and criminalize the people by his thievery.
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Alis's Opinion
···
10/03/2016
If this provision of Dodd-Frank had existed BEFORE the Bush-induced financial meltdown, it's possible a gazillion Americans would NOT have lost their homes! Capitalism is a wonderful system as long as greed is NOT allowed to overwhelm with the system. We need regulation to keep Wall Street from moving ALL THE WEALTH UPWARD. They have nearly succeeded & almost destroyed the world's strongest economy out of greed in 2008. Do we really want to trust these people to repent & never amass huge amounts of money to their benefit & our collective loss again? (Of course, Rep DeSantis & Sen Rubio would love to do this because their pockets are lined with the payoffs of the greedy.)
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Bonnie's Opinion
···
10/03/2016
Regulate them until they prove they're using our money responsibly. Then, if not, take them over. If local financial cronies won't police each other, the Feds will be required to do so.
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What is House Bill H.R. 4894?

This bill would repeal Title II of the Dodd-Frank Act, which gives the federal government the ability to force large, systemically important financial institutions into liquidation if they become or are in danger of becoming insolvent.

Currently, the Federal Deposit Insurance Corporation (FDIC) has the ability to resolve the bankruptcies of such banks and financial institutions over a three to five year period if they become insolvent. The FDIC is authorized to borrow from the Treasury to provide the cash for an “orderly liquidation fund” that would be used to pay off the creditors of failed banks.

Impact

Large, systemically important financial institutions that are or are at risk of becoming insolvent; the FDIC; and the Treasury.

Cost of House Bill H.R. 4894

The CBO estimates that enacting this bill would reduce the deficit by $15.2 billion over the 2017-2026 period.

More Information

In-Depth: Rep. Randy Neugebauer (R-TX) explained why House Republicans object to the “orderly liquidation authority” that the FDIC is granted under Title II of Dodd-Frank during committee debate over this bill:

“What Title II is, is a parachute clause… Just in case we get it wrong again like we did in 2008, we have got this little provision here that we can bail out these entities again. Eliminating Title II basically does eliminate the taxpayers from having to be on the forefront… because it takes away an important funding process.”

House Democrats have expressed their opposition to this bill, as a statement by Reps. Maxine Waters (D-CA), Ed Perlmutter (D-CO), and Ruben Hinojosa (D-TX) referred to it as “extremist ideology” while adding that “we absolutely should not repeal the only mechanism to terminate a failing megabank.”

The House Financial Services Committee passed this bill on a party-line vote of 34-22, which was introduced by Rep. Lynn Westmoreland (R-GA) and has one cosponsor — Rep. Rick Allen (R-GA).


Media:

Summary by Eric Revell
(Photo Credit: Vlad Lazarenko / Creative Commons)

Official Title

To repeal title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act.

bill Progress


  • Not enacted
    The President has not signed this bill
  • The senate has not voted
  • The house has not voted
      house Committees
      Commodity Exchanges, Energy, and Credit
      Committee on Agriculture
      Committee on Financial Services
      Antitrust, Commercial, and Administrative Law
      Committee on the Judiciary
      Committee on Ways and Means
    IntroducedApril 11th, 2016
    No more Dodd-Frank! Enough with the crony capitalism! The Dodd-Frank Act "is categorized into sixteen titles and, by one law firm's count, it requires that regulators create 243 rules, conduct 67 studies, and issue 22 periodic reports. [Ostensibly, the aim] of the legislation is: To promote the financial stability of the United States by improving accountability and transparency in the financial system, to end "too big to fail", to protect the American taxpayer by ending bailouts, to protect consumers from abusive financial services practices, and for other purposes. On July 12, 2012, the Competitive Enterprise Institute joined the State National Bank of Big Spring, Texas, and the 60 Plus Association as plaintiffs in a lawsuit filed in the U.S. District Court for the District of Columbia, challenging the constitutionality of provisions of Dodd–Frank. The complaint asked the court to invalidate the law, arguing that it gives the federal government unprecedented, unchecked power. The lawsuit was amended on September 20, 2012, to include the states of Oklahoma, South Carolina, and Michigan as plaintiffs. The states asked the court to review the constitutionality of the Orderly Liquidation Authority established under Title II of Dodd–Frank. In February 2013 Kansas Attorney General Derek Schmidt announced that Kansas along with Alabama, Georgia, Ohio, Oklahoma, Nebraska, Michigan, Montana, South Carolina, Texas and West Virginia would join the lawsuit. The second amended complaint included those new states as plaintiffs. On August 1, 2013, U.S. District Judge Ellen Segal Huvelle dismissed the lawsuit for lack of standing. In July 2015, the Court of Appeals for the District of Columbia Circuit affirmed in part and reversed in part, holding that the bank, but not the states that later joined the lawsuit, had standing to challenge the law, and returned the case to Huvelle for further proceedings. https://en.m.wikipedia.org/wiki/Dodd–Frank_Wall_Street_Reform_and_Consumer_Protection_Act#Overview?wprov=sfsi1 The FDIC shouldn’t be able to choose which failing financial institutions are in need of liquidation and bail them out with taxpayer dollars. This bill takes that option away from the FDIC. Rep. Randy Neugebauer (R-TX) explained why House Republicans object to the “orderly liquidation authority” that the FDIC is granted under Title II of Dodd-Frank during committee debate over this bill: “What Title II is, is a parachute clause… Just in case we get it wrong again like we did in 2008, we have got this little provision here that we can bail out these entities again. Eliminating Title II basically does eliminate the taxpayers from having to be on the forefront… because it takes away an important funding process.” What Is Crony Capitalism? Crony capitalism and genuine capitalism, if not opposites, are fundamentally opposed. Unfortunately the broader public, to date, is largely unaware of this. Crony capitalism is the marriage of the state and private special interests. Some people have called it corporatism, mercantilism, fascism, or even Communism. We will call it crony capitalism. By whatever name, it is phony capitalism. Over the years the public has been taught that many of the problems it faces on a day to day basis such as the lack of jobs, rising prices, corruption in Congress, and so on are a result of capitalism. If so, it is a perverted capitalism. These unsavory realities are largely the result of government/private “partnerships.” Whether in banking, agriculture, housing, energy, transportation, manufacturing, or nearly any other facet of the economy, the “unsavory” parts are often the result of public/private collusion. Why can’t you get any kind of return on your money in a CD, the traditional vehicle for retirees? Crony capitalism. Why can Goldman Sachs, the largest investment bank, speculate in markets using newly printed government money that has been borrowed virtually for free? Crony Capitalism. Why is Detroit a shadow, barely a shadow, of what it once was? Crony capitalism. Why are there more farm regulators than farmers? Crony capitalism. Why does Congress write laws that are longer than the Old Testament with obscure, impossible to understand language? Crony capitalism. When the state and powerful private interests collude the result is a cocktail of market distortion. Genuine capitalism in comparison, is quite simple. Capital is invested by individuals to further ideas and enterprises that the investor thinks will create a return on the money invested. If the enterprise in question is a good one, both investor and business owner win. If not- better luck next time. It’s clear. It’s simple. It’s moral. However, invariably once the state gets involved as investor, or “regulator”, things start to morph and twist. As sure as the sun rises, coercion and corruption rear their heads. Crony capitalism can take many forms including regulatory capture ( regulated interests actually using government power to squelch competition), zoning, licensing, in some cases even copyright, and hundreds of other ways. The one thing all of these “tools” have in common, however, is that they are used by the politically connected few to extract money and power from the unconnected many. Government gives a veil of legitimacy to actions taken by individuals and groups that would be considered unethical (at best) without government “permission.” More often government also uses its power to make everyone play along. If you break a law, you can go to jail. http://www.againstcronycapitalism.org/what-is-crony-capitalism/
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    What happen to the Roosevelt laws that keep bankers in check. As if i robbed the american people i would be jailed. What makes the bankers ( all of then , from top down) who robbed the american people during the bush/ cheney rapping, which is why obama had to hoc our country to the fed res ( $20 trill? ) WAKE UP AMERICA, stop the madness, when your leaders r puppets to the money changers( the rulers) we become serfs, and accomplesses to their thieving, murderess ways, when ur gov is crooked, r u bot inspired to be ? WAKE UP, ur in a nightmare, if u stay asleep it will only continue to get worse, is this the american dream of ur mother&father's, his mother&father's..., the dream u want for ur children, thier children..., to be slaves to the 1%??? Stand up for ur fellow american, what is happening to them could soon be at ur door? T BANKER SHOULD BE SENT TO A FEDERAL MAX, for he does more to starve and criminalize the people by his thievery.
    Like (12)
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    Share
    This bill does not undermine Dodd-Frank (not that I would mind if it did, but it simply doesn't), and it certainly doesn't undermine the financial system. It's repealing the part of the FDIC that guarantees creditors in the event of the bank going bankrupt. It's repealing the part of the act that makes banks a risk-free investment. The market distortion would be leaving that in place, not repealing it. What this legislation is restoring is that (1) there's no such thing as a risk free investment, and (2) saving your money in a bank is making an investment. Banks are not sure things. Having the article in question in place has caused people to act like they are and so banks have raked in cash that they can then loan out with abandon because if it all goes wrong they're not on the hook for making sure people get their money back. In the absence of that article (i.e., with the passage of this) banks will need to formulate much safer portfolios of investments and mortgages in order to convince people to save their money with the bank. You take this safety net out of Dodd-Frank and the free market will naturally push the banks to become safer. Leaving it in place is in fact what is distorting the financial market.
    Like (18)
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    It's over regulation & the delusional notion that the direct involvement of "alphabet agencies" can "HELP"...that's holding up Equities right now (in 2016)!
    Like (8)
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    Absolutely repeal Dodd-Frank. Capitalism gives bank a Constitutional right to fail. No more taxpayer bailout or large Federal fines that suck the life out bankruptcy for investors.
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    If this provision of Dodd-Frank had existed BEFORE the Bush-induced financial meltdown, it's possible a gazillion Americans would NOT have lost their homes! Capitalism is a wonderful system as long as greed is NOT allowed to overwhelm with the system. We need regulation to keep Wall Street from moving ALL THE WEALTH UPWARD. They have nearly succeeded & almost destroyed the world's strongest economy out of greed in 2008. Do we really want to trust these people to repent & never amass huge amounts of money to their benefit & our collective loss again? (Of course, Rep DeSantis & Sen Rubio would love to do this because their pockets are lined with the payoffs of the greedy.)
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    It's not the place for the govt to liquidate businesses
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    Good luck getting this passed through legislation, haha. Crony Capitalists "own" half of the legislators.
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    Regulate them until they prove they're using our money responsibly. Then, if not, take them over. If local financial cronies won't police each other, the Feds will be required to do so.
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    Let the free market decide. The FDIC protects individuals who put money in the banks that fail.
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    It's not the job of the federal government to decide who wins and who losses.
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    Wake up folks! Just replace "Feds" with, "The Peoples Committee for Fiscal Management". We already have "Dear Leader" in the White House. Look at the glorious government bailout of GM comrades. The unions now own 51% and the employees all got a $5000 bonus. No vote buying here! Then, many dealers who had huge investments in their business and many employees were told there were no longer needed. And finally, GM employees after years of saving who had six figure amounts in GM stock received 10 cent on the dollar payouts! A $300,000 portfolio was reduced to $3000. Romney was correct, GM should have filed for bankruptcy, stockholders would've been paid first, not political hacks!
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    As long as he FDIC is able to maintain integrity regardless of a banks health, then the concept of the Fed handling liquidation is fine.
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    Republican'ts sucking corporate cock again! Vote these paid for, career politicians out now! There is no free market if what you get for your needs is only what they desire to offer.
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    REPEAL the entire Dodd-Frank bill. It should of NEVER been passed and all in government knows that !
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    Make them go through bankruptcy just like everyone else has had to. It should not be that investors only reap profits and the taxpayer has to bear the brunt of losses. There should be no such thing as 'to big to fail'.
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    Keep the state out of private business.
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    No they should never be able to use tax dollars to assist or harm for that matter a private business. The government should not get involved with the markets that's where recessions come from. We need the free market to run its course the the most effective and fair economy. Also the federal reserve needs to be abolished asap
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    Repealing "Dodd-Frank" would be a good start!
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    Keep the government out of business. It's that simple
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