Hoyer: $50 Billion Bank Fund Not Central to Financial Overhaul

Posted April 20, 2010 at 11:43am

House Majority Leader Steny Hoyer (D-Md.) signaled Tuesday he could live without a Wall Street-funded reserve to help wind down failed banks, which has become a lightning rod of Republican attacks on the financial reform effort.

“I don’t think the fund is central to what we’re doing,” Hoyer told reporters at his weekly press conference. “What’s central to what we’re doing is putting the referee back on the field that the Bush administration took off the field.”

The proposed $50 billion fund has become a focus of GOP criticism of the regulatory overhaul, as Republicans charge it would ultimately put the taxpayers on the hook for bailing out sinking financial institutions.

Hoyer called the critique “grasping at straws” and likened it to the firestorm that erupted last summer over the Democratic health care reform push when conservatives framed an end-of-life counseling provision as a stealth effort to set up government-sponsored death panels.

“You can assert it, and if you assert it long enough and hard enough, people who are susceptible to believing that we’re doing things that are not in their best interest can respond, ‘Oh well, I don’t like that.’ And I agree with that. We don’t like it either,” he said. “We’re not providing for additional bailouts.”

Democratic negotiators are still searching for ways to salvage the fund, but they have signaled they may be willing to scrap it in order to secure critical GOP Senate support for the reform package. Congressional Democrats have favored setting up the reserve before any failure, so it would be ready to swing into action in the event of one. The administration has backed establishing a fund only after an institutional meltdown, worrying its existence could encourage risky behavior. Hoyer on Tuesday suggested either approach could work, as long as industries, and not taxpayers, pick up the tab.