White House agrees with McConnell, Dodd "reform" bill perpetuates bailouts

All this week the Democrats have questioning the veracity of the Senate Minority Leader Mitch McConnell's belief that Sen. Chris Dodd's financial reform bill will perpetuate government bailouts is false.

But it seems that the White House agrees with McConnell.

The Obama administration is urging Senate Democrats to drop a $50 billion bank liquidation fund from a financial regulation bill. The money has become a target of Republicans, who have branded the fund a Wall Street bailout.

A senior Treasury official said Friday the administration does not support the fund and that it is unnecessary. Under pending Senate legislation, large financial institutions would provide the $50 billion, which the Federal Deposit Insurance Corp. would use to pay for dismantling giant failing firms.

Republicans are unified in their opposition to the regulation bill and say the fund would encourage banks to take excessive risks.

The administration instead wants the costs of liquidation to be paid by the financial industry after a firm has failed and been dismantled.

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