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AFR in the News: A bipartisan push to bring back bank bailouts

Submitted by on February 24, 2012 – 2:58 pm
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A bipartisan push to bring back bank bailoutsSuzy Khimm (Washington Post)
February 17, 2012

“Remember the Lincoln amendment? Passed as part of Dodd-Frank, it prohibits firms that trade in certain kinds of derivatives from receiving government assistance, with the intent of making big bank bailouts less likely.  First proposed by then-Sen. Blanche Lincoln (D-Ark.), the amendment led to a huge fight during the 2010 debate over Wall Street reform. Now House Republicans are moving forward with a bill to repeal it. And some Democrats — including Rep. Barney Frank, the legislation’s namesake — are joining them. …Advocates on the left, however, are adamant that the ban remain in place, arguing that it forces banks to put up greater collateral to back up risky bets. ‘It is a form of firewall between swaps dealing and the rest of your operations, requiring separate capitalization,’ says Marcus Stanley, policy director of Americans for Financial Reform. ‘When you allow banks to do absolutely unlimited derivatives activities, it’s hard to separate banking from speculation.’ With support from some prominent Democrats, Hayworth’s bill stands a better chance of passing than most of the Dodd-Frank reform bills that Republicans have pushed thus far. That said, while House Democrats might not put up a fight to stop the repeal bill, their Senate counterparts might feel otherwise.” Click here for more.

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