White House asks Senate to drop permanent bailout from financial reform

Democrats have been extremely defensive this week about any suggestions that their financial reform bill contains a “permanent TARP bailout.” In an appearance on Hardball, Sen. Chris Dodd, D-Conn., denied that there was any such bailout, to the approval of host Chris Matthews, who actually said such a suggestion was merely a use of “dishonest language” constructed by public relations professionals.

But aside from the fact that very credible, knowledgeable people like Peter Wallison hold this view, the White House is now asking for the permanent TARP bailout provision to be removed from financial reform. From the AP:

The Obama administration is urging Senate Democrats to drop a $50 billion bank liquidation fund from a financial regulation bill. The money has become a target of Republicans, who have branded the fund a Wall Street bailout.

A senior Treasury official said Friday the administration does not support the fund and that it is unnecessary. Under pending Senate legislation, large financial institutions would provide the $50 billion, which the Federal Deposit Insurance Corp. would use to pay for dismantling giant failing firms.

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