Bair (* FDIC appointee ) Rejects McConnell Talking Points

Would this bill perpetuate bailouts?

BAIR: The status quo is bailouts. That's what we have now. If you don't do anything, you are going to keep having bailouts. Bankruptcy doesn't work -- we saw that with Lehman Brothers.

But does this bill stop them from happening?

BAIR: It makes them impossible and it should. We worked really hard to squeeze bailout language out of this bill. The construct is you can't bail out an individual institution — you just can't do it.

In a true liquidity crisis, the FDIC and the Fed can provide systemwide support in terms of liquidity support -- lending and debt guarantees -- but even then, a default would trigger resolution or bankruptcy.

On behalf of our 5,000 member community banks nationwide, I am writing to express the support of the Independent Community bankers of America (ICBA) for your joint efforts to advance legislation in the Senate to reform the laws governing our nation’s financial institutions, and to share with you our views on some of the key issues you will be confronting.

ICBA is encouraged by your joint statement released on December 23 that you are committed to working together on legislation to create a sound regulatory structure, and that meaningful progress is being made. As you know, ICBA has long advocated meaningful and fair regulatory reform to address the systemic danger posed by too-bigto-fail financial companies, both banks and non-banks, and restore the competitive balance between Wall Street and Main Street. Our nation, still reeling under the consequences of reckless and irresponsible risk-taking by too-big-to-fail institutions, can no longer afford to live with the status-quo.