Source: Financial Regulation News
By FINANCIAL REGULATION NEWS REPORTS
U.S. Rep. Carolyn Maloney (D-NY) offered legislation to protect the Orderly Liquidation Authority (OLA) of Dodd-Frank, which ensures that taxpayers do not have to bailout failing financial institutions.
“The Republican peddled idea that the Orderly Liquidation Authority will lead to bailouts is not only wrong, it’s dangerous. My amendment strikes the majority’s section on the OLA, which is highly misleading and fundamentally flawed, and replaces it with views that more accurately reflect reality,” said Maloney, the ranking member on the House Financial Services Committee’s Subcommittee on Capital Markets, Securities, and Investment.
The amendment was introduced during the House Financial Service Committee’s consideration of its budget views and estimates.
“The OLA is critically important, because it allows the FDIC to safely wind down a large non-bank financial company like Lehman or AIG, without causing a financial crisis or resorting to a taxpayer bailout,” Maloney said.
Using the bankruptcy code to wind down Lehman Brothers during the financial crisis was a failure, she said, sparking a world-wide panic that almost brought down the global economy.
“Any firm that is wound down under the OLA must — by law — be liquidated, its shareholders and creditors must bear any losses, the management that was responsible for the failure must be fired, and taxpayers must not bear any losses whatsoever. This is not simply what we hope will happen under the OLA — it is the law and clearly not a taxpayer-bailout,” Maloney said. “If the majority truly wishes to avoid more taxpayer bailouts, they will support my amendment.”