White House Endorses 'Too Big to Fail'

" Try to elect says the Obama administration as well as the Fed endorsing a new plan for allowing the government take over clothes and wind down big failing financial firms the plan. Designed to try to ensure that the taxpayers in the Fed don't pay for the clean up and that the financial and -- services industry itself. Pays for -- Treasury Secretary Geithner and others testifying at the house financial services committee this morning. On a resolution authority plan. Written by the committee chairman Barney Frank everybody wants to avoid another AIG which got a taxpayer rescue. About 188 billion so chairman frank has proposed making the Federal Deposit Insurance Corp. The agency to handle this kind of thing in the future the FDIC already handles it with failed banks as you know and as with the bank's financial services companies would. Pay for the cost of the clean up by paying fees to the FDIC. The bill would also give the Fed new powers to regulate firms to prevent them from getting into trouble in the first place through bad management practices or excessive risk taking now in his testimony this morning. Secretary Geithner says the frank plan quote. Produces strong accountable supervision. Of all our major financial firms and imposes costs and not on the taxpayer but with the risk takers where they have a long. What this bill does not do is provide the government a government guarantee for troubled financial firms that does not create eight. -- list of systemically important financial firms that does not create. A permanent tar like authority that does not give the government broad discretion to step in and rescue insolvent firms. And it does not give comfort to investors creditors counterpart is our management that the government will be there to absorb losses from risky business strategies select suspect."

" We Peter Barnes. I cannot really don't hold a second. Didn't he added that he's pretty far there are so yeah this suggesting. Here. That Geithner is basically saying Barney Frank's plan. Doesn't come close to addressing. The too big to fail problem."

" Not only is he is saying it that it -- C he is saying here it just have to repeat what he says here in the what this bill does not do it is provide a government guarantee for troubled financial -- so it does. Fix the problem of having the taxpayers because the whole issue is -- if a firm fails in the future is it going to be like another AIG Citi -- Bank of America is the government going to have to come to the rescue no. The industry is going to have to pay for its own cleanup that's what he's saying and has come."

" Okay because what I was reading your back and comments and found in the beginning like he supported it then the backing and is okay not to -- he does not do that. Supports it 100%. No question. Okay so Peter he go when he testifies in the house financial services committee talks about this now. Let's break down real hard cold facts here what is heat will regulatory reform this year or isn't it 2010 issue."

" This is probably going to be a 2010 issue they are trying to get all this done before the end of the year but the calendar looks jammed and just practically speaking. If it's not it's taking too much time. Alexis the real play is over in the Senate where they haven't even really begun writing well that they've begun to write some legislation according to sources over there. But remember the Senate is where they have to have the sixty votes to get anything done. The Republicans have a lot more say in the process over there and as a result everybody that every as chairman frank is going to get all this jam this through. No question about it he will be done before the end of the year and the house that fact may vote on this before the end of the year but the Senate and the Senate banking committee. Are still trying to put something together and it's going to take a lot longer over there and be."

" A lot more difficult -- there we just saw on Peter and by the way Treasury Secretary Geithner walk into the house financial services rooms as soon as he's ready testify wouldn't bring you there. Peter you mentioned that the Senate process and that's going to rely heavily obviously on senator Christopher Dodd chairman of the banking committee. And senator Shelby on the Republican right side. What do we know now about what they're willing to take up given the fact that the health care conversation is the topic right now of debate."

" Well I can tell haven't talked to some sources over there and and and and they and senator Shelby and senator Dodd. Are working behind the scenes right now to try to come up with a bipartisan framework. That will allow them to move forward. Relatively quickly. With our regulatory reform but there again a lot of issues over there. That they have to work through but I think that the one thing they do agree on is they do not want to give them. Bad as much power. They've been much more critical of the Fed and as as you know the supreme. Financial services regulator. Which it which the Barney Frank bill. Does and so you're going to see a conflict here between what's in the frank -- and what's in the Senate bill. And the Senate will probably use more of a of a council of regulators. Fact chairman Dodd has proposed merging all these regulators together that probably is going to happen but you'll see a more powerful council of regulators what the Fed. First among equals getting some additional powers but then the Senate will pass its version the house -- passage for its version. And they're the real fight will be in this in the conference committee on this likely early next year. Yeah there will be there will be a bill that would be some kind of bill all right Peter Barnes thank you so much appreciate."