The GOP is offering a counter plan for overhauling Wall Street regulation today. The biggest highlight from their alternative is a plan to add a new section to the bankruptcy code for failing non-bank financial institutions, instead of codifying bailouts like the Obama plan does. Failing banks would still be protected by the FDIC, as they would under the president’s proposal, but taxpayers wouldn’t be on the hook for the financial firms and much of the idea of too big to fail would be removed from the system.
The Republicans, if they had any hope of actually passing their bill, would reform the GSEs by cutting federal ties to groups like Fannie Mae and Freddie Mac. This is encouraging to see and may have enough public support to get in a final bill if the GOP plays their cards right. The House GOP plan also seeks to peal back some of the powers of the Federal Reserve, unlike the president’s plan, and attaches Rep. Ron Paul’s proposal to have Congressional audits of the Fed.
Later today on the blog I’ll put up a chart comparing the different provisions of the Obama plan vs. the GOP plan. The Washington Times has a short write up on the new proposal today as well.