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Wallace Challenges McConnell On 'Bailout Fund': 'Isn't That Intended To Liquidate Failing Firms, Not To Prop Them Up?'

Well, this is about as close as you're ever going to see anyone on Fox "News" actually challenge a Republican. Chris Wallace actually calls out McConn
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Well, this is about as close as you're ever going to see anyone on Fox "News" actually challenge a Republican. Chris Wallace actually calls out McConnell's Frank Luntz talking point that resolution authority is a bailout fund intended to liquidate them rather than to prop them up. Of course par for the course with Fox, he allows all of McConnell to blather on and doesn't challenge his response. Mission accomplished.

And if this isn't further proof that the Republicans are not going to act in good faith when negotiating with the Democrats, I don't know what is. They are always going to find some other reason to play Lucy with the football and pull the ball away when pretending there might be some common ground to be found. They have no interest in governing. All they care about is getting back into political power.

Of course Wallace like most in the media are never going to ask McConnell about the his donations from the financial industry or him courting Wall Street for donations to kill this bill on their behalf if they help elect more Republicans.

Transcript below the fold via Lexis Nexis.

WALLACE: All right. Let's turn to an issue that you are dealing with, and that is financial regulation. Senate Democratic Leader Harry Reid has called for a vote sometime Monday afternoon/Monday evening to cut off a filibuster by Republicans to bring the financial regulations bill to the floor of the Senate.

WALLACE: Is there a bipartisan compromise? If not, do you have the 41 senators on board to sustain the filibuster?

MCCONNELL: Well, we don't have a bipartisan compromise yet. But I think there is a good chance we're going to get it. What I'd like to see is an opportunity to prevent the Democrats from doing from the financial services industry what they just did to the healthcare of this country. We saw the CMS report on Friday. We know that everything --

WALLACE: Would you say those are the health and human services actuaries?

MCCONNELL: Actuaries. Looking at what would be the impact of this bill. And he virtually confirmed everything that Senate Republicans were saying about the healthcare bill. It's not going curb costs. A whole lot of budget gimmicks, and on and on. We want to make sure that they don't have the same kind of approach on financial services that they did on health care. And ironically, Chris, my view is very similar to that bastion of conservatism and tool of Wall Street, the "Washington Post" editorial page, which said this morning that this bill needs to be improved -- $50 billion bail- out fund needs to come out.

We need a system in there under which creditors can expect that they're going to be treated fairly, somewhat similar to the bankruptcy laws. And we need to have capital requirements. None of that is currently in the bill that the majority leader would try to have us take up on Monday which came out of the committee on a strictly party line vote. That is not the best place to start.

WALLACE: All right, I want to press the question I asked you before, though. Do you have the 41 Republican votes to sustain the filibuster tomorrow?

MCCONNELL: It's my expectation that we will not go forward with this partisan bill tomorrow. That will stimulate the kind of continued discussion we have to get it right along the lines that the "Washington Post" is recommending this morning and along the lines I think is the best way to go as well.

WALLACE: Well, let's talk a little about that. The big argument as you framed is it whether the Democratic bill will prevent more bail-outs as the Democrats claim or whether it will enable more bail- outs as you claim. Senator, isn't the $50 billion fund that you criticize -- and I must say, that was part of the "Washington Post" story, too. Isn't that intended to liquidate failing firms, not to prop them up?

MCCONNELL: Well on that issue as to whether or not it's a good idea to raise the money and stick that fund in there, the secretary of the Treasury, the president's own secretary of Treasury agrees with me. The "Washington Post," as I just indicated, agrees with me. It's better not to prefund, no matter how you fund it, whether it's a tax on banks or whatever it is, a fund that creates an expectation that it will be used. In addition to that --

WALLACE: What would it be used for? It would be used to liquidate, not to prop them up.

MCCONNELL: It would be used in the same way that we use the TARP funds back in 2008. And, you know, that is a bad idea. What we need to do is make it virtually, if not impossible, to be too big to fail. The way you do that is enhanced capital requirements.

WALLACE: Enhanced capital requirements is in the current bill.

MCCONNELL: Not in the way that we would do it. And second, don't suggest to creditors that if you are a friend of the government, you're going to be treated better. We saw that in the General Motors deal. The government treated the unions better than it did the bondholders. We need to have creditors understand that they're likely to be treated very, very similarly to the way they would be in bankruptcy law in this country. That kind of stability, I think, is a better place to start in the Senate than this partisan Dodd bill that came out of committee without a single Republican vote.

WALLACE: And you are saying that until you get satisfaction on these issues, and it sounds like there are several issues, not just the $50 billion fund.

MCCONNELL: Yeah.

WALLACE: You're saying that until then you believe you have a solid Republican vote to keep the bill from getting to the Senate floor.

MCCONNELL: Yes, it's not ready yet. I mean, the Democrats over the weekend are arguing themselves over the derivatives portion of it, very complicated subject. The Democrats are not even in agreement on that. Chris, this is not a situation where anybody I know in the Senate wants no bill to pass. But it is important to pass a good bill.

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