Jersey Journal

U.S. Sen. Menendez Pushes For Passage Of Bailout Prevention Fund

The Jersey Journal — Monday, April 12, 2010

By Mark Maurer / The Jersey Journal

Senator Robert Menendez held a press conference in Hoboken on Monday highlighting his proposal to pass a bailout prevention fund so that taxpayers will not have to pay for future Wall Street blunders.

U.S. Senator Robert Menendez announced his proposal of the increase of a bailout prevention fund from $50 billion to $150 billion at a press conference at the Light Rail station in Hoboken Terminal on Monday morning.

The proposal is part of Wall Street legislation reform that would create a fund pre-paid by corporations, entitled an "Orderly Liquidation Fund," to prevent taxpayers from having to foot the bill for future bank bailouts, he said. The senator plans to debate the issue on the Senate floor in the next few weeks.

"The bottom line is that if these firms fall hard, we're all paying dearly, bailout or not," Menendez said. "That's why the most effective way to protect families is to create system in which, instead of a bailout, failing corporations have a soft landing into bankruptcy that is aided by a Wall Street-paid insurance fund, not taxpayers."

Menendez places responsibility on the shoulders of the profitable Wall Street companies to internalize the costs.

"We cannot accept a system that privatizes business but socializes risk," Menendez said.

Menendez named Sen. Jack Reed (D-RI) and Sen. Sherrod Brown (D-OH) as among supporters of this legislation. He said it was determined $150 billion would be sufficient for a single company, contrasting the figure with the $180 billion it took to bailout AIG in 2008.

In terms of the government's authority over the banks, banks are governed by federal charters and follow long-standing regulations.

Representatives of advocacy groups New Jersey Citizen Action and the New York Consumers Union were on hand to support the proposed fund.

"This will be a powerful deterrent to the high-profit, high-risk environment that Wall Street has become today," said Leslie Schlesinger, CRA organizer for New Jersey Citizen Action.

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