Today, the Times takes a tiny step toward answering that question. But only a tiny one. Here’s the lede:
Leaders of the Senate Banking Committee said Tuesday that they had reached an agreement to limit the likelihood that big banks would be bailed out by taxpayers. But liberal Democrats said they also would push aggressively for an array of proposals that could force some of the nation’s biggest banks to reduce their size.
The Times goes on to explain that, while the elimination of the $50 billion fund “seemed to put to rest a loud partisan dispute in recent weeks over whether the legislation might somehow perpetuate taxpayer bailouts, it also highlighted that the definition of a ‘taxpayer bailout’ is in many ways a question of semantics.”
OK. Getting closer. And then, this:
The proposed $50 billion fund, which was to be financed by a tax on big banks, was a means to avoid using taxpayer money to wind down failed financial companies. The F.D.I.C. similarly levies an assessment on banks, which it uses to help pay for bank failures.
Some Republicans had objected to the creation of a new $50 billion fund; Mr. Shelby, for instance, repeatedly derided as a “honey pot” that might get misappropriated for other purposes.
“Honey pot,” well, it may be well be, who knows? But it’s not a bailout.
The Journal didn’t seem to have the same trouble navigating this terrain today, with a simple line that the Senate would move quickly to Boxer’s amendment “that would explicitly state that no taxpayer funds could be used to rescue faltering financial firms.”
The Washington Post didn’t completely de-muddy the waters. Here’s its lede:
Lawmakers seeking to overhaul financial industry regulations grappled Tuesday with the question of how to cover the cost of federal bailouts.
But this story is mixing two things—debate over a bank tax to pay for the assistance Wall Street got during the crisis and the financial reform legislation on the Senate floor. It’s easy to see why readers might get confused. Here’s the Post on the elimination of that $50 billion fund:
Republicans have criticized the provision as a “bailout fund,” arguing that it would encourage financial firms to engage in overly risky behavior because they would know the money was there in the event of trouble. Under the deal reached by Dodd and Shelby, the government would recover the liquidation costs of a failing firm by selling off its assets, with the financial industry picking up any remaining costs.
The business press let the b-word float around for weeks. Maybe the next time some pols throw around such loaded words, readers can get a little more help sorting out if they’re just spinning.