Boxer's DOA amendment

Debate on the 1,400-page financial reform bill in the U.S. Senate began with a quick sword-swipe concerning bank bailouts.

It came Thursday from Democratic Sen. Barbara Boxer of California in a reaction, she said, to Republican complaints that the bill would not end taxpayer bailouts of firms deemed a risk to the financial system.

Boxer's amendment proposes a council of regulators be mandated to toe-tag companies on the brink of failure and take them apart -- or unwind them, in Wall Street parlance -- through a liquidation sale.

Bailouts are different. Bailouts are quick and simple if you think of banks that bounced back quickly using Troubled Asset Relief Program funding, and which pay back the government with interest -- a neat ploy, some would say. (It would have been neater had banks increased lending with the taxpayers' largesse, but that snip can wait for another day.)

However, bailouts are also haunting and politically untenable if you consider companies that have little or no chance to pay back billions of dollars of taxpayer funds required to see them through the financial crisis -- American International Group, for example.

In the background, the reform bill pushed through the Senate Banking Committee with no Republican votes to back it up made it to the formal debate stage on the Senate floor after three procedural votes fell short this week. Specifically, Republicans agreed to stop blocking the debate after Democrats signaled they were willing to reconsider a $50 billion fund that was intended to be levied on the financial sector to help unwind failing firms.

That $50 billion fund did not sit well with Republicans (nor was it favored by the White House, incidentally). Republicans said $50 billion is a lot … and, they said, it looks, smells, and walks like a duck, which is to say, it sure as heckfire (does that sound Republican?) looks like more bailouts were possible.

Not so, Boxer and other Democrats said. But Boxer thought she could close the deal with a "simple" bill that said any firm the council of regulators puts into receivership shall be liquidated.

With a provision titled, "Liquidation required," Boxer said, "No company is going to be kept afloat." That is to say, if you're in the system, put up the yard sale sign. You're gone. Furthermore, "All funds expended will be repaid to the taxpayers by the financial sector through assessments or the sale of the assets of the company," Boxer said.

Essentially, that means companies put into receivership under the bill would be dead on arrival. No bailouts for the dead -- just funeral expenses, and the financial sector would pay for that.

In international markets Friday, the Nikkei 225 in Japan rose 1.21 percent and the Shanghai composite index in China added 0.08 percent. The Hang Seng index in Hong Kong rose 1.59 percent and the Sensex in India rose 0.32 percent.

The S&P/ASX 200 in Australia rose 0.46 percent.

In midday trading in Europe, the FTSE 100 index in Britain lost 0.41 percent and the DAX 30 in Germany fell 0.05 percent. The CAC 40 in France slipped 0.14 percent and the pan-European DJ Stoxx 50 lost 0.68 percent.