April, 16, 2010

As the Obama administration and Senate Republicans clash over the future of the nation’s financial regulatory system, there is one principle on which they agree: Taxpayers should never again have to bail out giant financial institutions, Sewell Chan reports in The New York Times.President Obama says his legislation would let the Treasury Department, with court approval, take over and dismantle failing companies without costing the public a dime.

It would resemble the process used since the Depression to take over failing commercial banks.Republicans say the bill would make future bailouts even more likely. They worry that designating large financial institutions as “systemically important” would feed the markets’ perception that the companies have implicit government backing.The truth is actually more nuanced than either side admits, say legal and economic experts.

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