View Full Version : Bailouts: Rep: Finance Safeguards Just ‘TARP on Steroids’

10-28-2009, 11:02 AM
Reform Proposal Offers Fewer Oversight Protections Than Original Bailout

By Mike Lillis 10/28/09 9:06 AM

In the wake of the recent financial meltdown, it sounds like a reasonable idea: A proposal granting the White House broad new authority to take over when a failing institution threatens to drag others — perhaps the whole economy — down with it.

Yet that proposal, included as a part of wide-ranging finance reform legislation moving through the House this month, is also sparking bouts of indignation on Capitol Hill, where at least one vocal Democrat says the provision represents an executive-branch power grab that would prop up too-big-to-fail institutions at the expense of smaller banks.

Rep. Brad Sherman (D-Calif.), a former accountant and member of the House Financial Services Committee, says the proposed new bailout authority would create a kind-of mutant extension of the Wall Street bailout — the differences being, he maintains, that the $700 billion Troubled Asset Relief Program at least had a cap on spending, an expiration date, congressional approval, independent oversight and some executive pay limits for the banks on the receiving end of the taxpayers’ largesse. The California Democrat is calling the bailout authority requested by the White House, which lacks most of those safeguards, “TARP on steroids.”

“The key thing is that the executive branch have the power to commit, not just $700 billion,