Posted on 05/04/2010 12:59:08 PM PDT by Ernest_at_the_Beach
Congressional officials say Democratic and Republican negotiators on a sweeping overhaul of banking regulations have agreed to jettison a $50 billion liquidation fund from the bill.
The fund would have been financed by large financial institutions and would have been used to cover the government's initial costs of taking down a giant failing firm. Instead, the new agreement requires the government to recoup the costs of liquidation from creditors, with other financial firms covering outstanding costs only as a last resort.
The agreement sets in place assurances Republicans received from Democrats last week that removed objections that had kept the bill from being debated.
THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP's earlier story is below.
(Excerpt) Read more at newser.com ...
“. . . recoup the costs of liquidation from creditors . . . .”
This jibberish makes no sense to a former regulator???? Non-depositor creditors????
Talk about building in risk to the funding structure of a bank . . . Borrowed funding would evaporate . . . don’t know if there are enough deposits in the country to replace the borrowed funding liabilities of big banks. Sounds like it will run up the cost of deposits of community banks and create huge funding and liquidity problems for them. If I am interpreting properly, this is very, very bad news for us community banks.
Details are pretty loose....
How about we recoup the costs of liquidation from the bank owners and shareholders? That way, maybe they’ll think thrice about risky deals.
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