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US senate agrees to drop $50bn bailout fund in bill

THE US Senate made progress on a financial regulation reform bill yesterday, approving two amendments aimed at preventing a repeat of the massive taxpayer bailouts of Wall Street in 2008.

The Senate voted 93-5 for a plan that would set up a new government protocol for seizing and dismantling large financial firms that are in distress.

The measure seeks a middle path between the widely criticised 2008 bailouts of firms such as AIG and the bankruptcy of Lehman Brothers.

Under the plan, the Federal Deposit Insurance Corp would manage an “orderly liquidation” process for troubled firms whose collapse would pose risks to the banking system. The plan excludes a $50bn (£33bn) liquidation fund previously proposed, opting instead to cover the costs of liquidations from asset sales and, in case of shortfalls, from fees assessed against other large firms.