"Dodd to tweak Wall St. reform bill."

Dodd to tweak Wall St. reform bill,
Posted: April 22nd, 2010 09:09 PM ET

From CNN Associate Producer Martina Stewart

Washington (CNN) – The Democratic lawmaker taking the lead in crafting the Senate’s financial regulatory reform bill has agreed to a key change that would limit taxpayers’ exposure if the government must step in to wind down a large, failing financial institution, a key House Democrat said Thursday.

Rep. Brad Sherman, D-California, who sits on the House Financial Services Committee, told CNN that Sen. Chris Dodd, chairman of the Senate Banking Committee, has agreed to change a provision in the Senate bill to limit the Federal Deposit Insurance Corporation to borrowing no more than 90 percent of the value of the assets of a failing firm.

“The senator has agreed to changes that would prevent borrowing by the FDIC that could have been enormous,” Sherman said on CNN’s John King, USA.

With the change, explained Sherman, “when takes over a defunct entity, they’ll only be able to borrow 90 percent of the value of the assets they’ve taken over so that they have the liquidity to wind that entity up.”

Sherman told CNN Chief National Correspondent John King that the change was “considerably different” from how the bill currently operates.

King quickly sought to clarify: The FDIC “cannot use more taxpayers’ money than that firm is worth? So that if it had to sell the whole thing the day after tomorrow, the taxpayers would not lose a dime?”

“Exactly,” replied Sherman. “Now there will be money collected in advance from Wall Street, but that’s Wall Street’s money. That’s not taxpayer money.”

http://politicalticker.blogs.cnn.com/2010/04/22/dodd-to-tweak-wall-st-reform-bill-lawmaker-says/?fbid=FIK4gPKmci8