Bill in works to let U.S. dissolve failing firms

... and how long until government decides which marriages to dissolve?

Bill in works to let U.S. dissolve failing firms

Intent is to avoid bailouts 'No taxpayer money' would be spent

House Financial Services Committee Chairman Barney Frank acknowledges the political difficulty in creating resolution authority. (Susan Walsh/associated Press)

By David Cho, Brady Dennis and Neil Irwin

Washington Post Staff Writer
Tuesday, October 27, 2009

House Democrats and the Obama administration are preparing to introduce major legislation aimed at eliminating the devil's choice the government faced last fall, when officials felt forced to decide between spending billions of dollars to rescue some of the nation's most powerful financial firms or letting their failures sink the economy.

The lawmakers and Treasury Department officials labored over the weekend to finish drafting legislation that would empower the government to seize troubled firms other than banks that are deemed "too big to fail." The legislation would set up the Federal Reserve to oversee the largest financial firms, and eliminate the agency that regulates thrifts. The officials said the measure could be unveiled as soon as Tuesday.

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