- Shelby Takes Issue with Geithner Statement
- April 6, 2010
- Law Firm: Alston & Bird LLP - Atlanta Office
Yesterday, Senator Richard Shelby (R-AL), the ranking member of the Senate Banking Committee, sent a letter to Treasury Secretary Timothy Geithner stating that Secretary Geithner had mischaracterized Shelby’s position on Committee Chairman Christopher Dodd’s (D-CT) financial reform bill in Geithner’s speech to the American Enterprise Institute on Financial Reform on March 22.
In Secretary Geithner’s remarks, he quoted several excerpts from a speech that Senator Shelby gave last November to the Oxford Union. While the Senator’s letter stated the he appreciated that Secretary Geithner had read his speech, he took issue with several of Secretary Geithner’s statements.
According to the letter, Senator Shelby believes that, although the Dodd bill “represents a big improvement” over the bill sent to Congress last year, it does not adequately address the problems relating to the “too big to fail” concept. Shelby’s problems with the Dodd bill include:
• The bill provides the Federal Reserve with enhanced emergency lending authority that is too open to abuse.
• The bill grants emergency authority to the FDIC and Treasury to provide broad debt guarantees, which would “give the FDIC and Treasury a backdoor to prop up failing institutions.”
• The bill sets up a $50 billion “slush fund that, while intended for resolving failing firms, is available for virtually any purpose that the Treasury Secretary sees fit.”
• The bill charges the Federal Reserve with special oversight of large, systemically significant financial firms, which the Senator believes will lead to those firms being viewed as “too big to fail” and implicitly backed by the government.
Senator Shelby concluded his letter by stating that he remains committed to the goal of addressing “too big to fail” and creating a credible resolution regime, and that he looks forward to working with Secretary Geithner and the President in the coming weeks.