A Senate measure advertised as protecting taxpayers from another Wall Street bailout would still leave them fronting the money if the government moves to liquidate a big failing company like insurance giant AIG.
Taxpayers could end up putting up billions of dollars to cover the costs of dealing with such a firm and be able to recoup that money only over a period of five years, under the Senate’s sweeping overhaul of financial regulations.
An amendment the Senate is expected to pass Tuesday states that "taxpayers shall bear no losses from the exercise of any authority under this title."
Sen. Richard Durbin, D-Ill., says the legislation means: "We’re never going to let the taxpayers and Treasury face this kind of obligation."
But the measure doesn’t prevent that kind of obligation, though it does require that taxpayers would be paid back.
"The bill ensures taxpayers don’t get stuck paying for Wall Street’s mistakes," said Kirstin Brost, a Democratic spokeswoman for the Senate Banking Committee. The government would have top priority getting repaid, with proceeds of the sale of a liquidated firms’ assets going to the government first.