Sunday, April 15, 2012

House Panel Proposes to End Parts of Dodd-Frank Orderly Liquidation for Deficit Reduction

The House Financial Services Committee plans to vote on legislation ending the bailout authorities of the orderly lquidation Title II of the Dodd-Frank Act spart of a deficit reduction to help avert what the Obama administration calls “catastrophic” automatic spending cuts to national security.

The legislation would end the FDIC bailout authority bestowed by Dodd-Frank including the FDIC authority to lend to a failing financial firmand to purchase the assets of a failing firm and to guarantee the obligations of a failing firm. The legislation would also end the ability of the FDIC to borrow up to 10% of the book value of the failed firm’s total consolidated assets in the 30 days immediately following its appointment as receiver; after those 30 days, the FDIC is authorized to borrow up to 90% of the fair value of the failed firm’s total consolidated assets.

The Congressional Budget Office (CBO) estimates the proposal will save $22 billion over 10 years.

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