HELENA – A proposed $50 billion fund for taking apart banks that are “too big to fail” is an arbitrary figure that should not tank financial overhaul legislation — if Senate Republicans truly want to negotiate, Senate Banking Committee member Jon Tester said Friday.
But that fund can’t go to zero or there will be more bank bailouts in the future, the Montana Democrat told The Associated Press in an interview on the bill scheduled to be debated on the Senate floor in the coming weeks.
The bill passed out of Tester’s committee last month, but he said he is not happy with how it would handle regulation of derivatives, those financial instruments such as mortgage-backed securities whose value plummeted during the housing crisis.
President Barack Obama said Friday that he would veto the bill if it doesn’t regulate the derivatives market, but Tester said the bill doesn’t go far enough.
“I don’t think that it increases the transparency like it needs to be done,” he said. “I think sunshine on this is important. I think one thing we should have learned is there needs to be more transparency, not less.”
The bill aims to prevent another Wall Street crisis like the one that caused a near economic meltdown in 2008. It proposes creating the $50 billion fund financed by large banks to pay for liquidating a large failing firm and would take measures to detect financial threats and protect consumers.
Obama administration officials have urged Senate Democratic leaders to remove the $50 billion fund, which has become the most contentious part of the bill after Republicans called it a Wall Street bailout.
“That was an arbitrary figure anyway. That’s no big deal,” Tester said. But, “I think if you remove it all, the question has to be asked how are you going to unravel these financial institutions that get into trouble?”
Forty-one GOP senators have signed a letter to Democratic leaders voicing their opposition to the bill and demanding further negotiations. Republicans said in the letter, “We are united in our opposition to the partisan legislation reported by the Senate Banking committee.”
The bill needs more than 60 supporters to prevent it from stalling in the Senate. But Tester said the bill may not be in trouble if Republicans want to negotiate. If they are looking to forestall any Wall Street overhaul, then the bill’s future is cloudier, he said.
He acknowledges that the rancorous partisan debate over the recently passed health care law has not helped things, and he expects the tension to continue through this fall’s elections.
“There’s no reason at this point in time we should have people stand up saying, ‘We’re voting against it.’ We’re not at that point yet. But that’s the way it’s been,” Tester said.