Financial reform amendment passed

WASHINGTON, May 5 (UPI) -- The U.S. Senate Wednesday voted 93-5 in favor of an amendment aimed at preventing future taxpayer bailouts of big banks and investment firms.

The legislation removes a $50 billion fund that would have covered the cost of liquidating collapsed financial firms, The Washington Post reported. Republicans opposed the fund, to have been paid for by the financial industry, saying it would have been an incentive for companies to make risky investments.

The strongly bipartisan vote came after Senate Banking Committee Chairman Chris Dodd, D-Conn., and Sen. Richard Shelby, R-Ala., reached agreement on final language on the legislation they hammered out last week regarding those firms considered "too big to fail," Politico said.

"For over a year now, Senator Shelby and I have been working on ways to end bailouts," Dodd said prior to the vote. "All of us agree that that ought to be done. While we have had our differences in other areas, we have always shared a commitment to ensuring that taxpayers would never again be forced to bail out giant Wall Street firms that fail."

Shelby voiced his support for the amendment on the floor, Politico said.

Taxpayers would still put up billions of dollars to cover the costs of dissolving a collapsed firm through a line of credit from the Treasury to the Federal Deposit Insurance Corp. but would recoup that money through the sale of the company's assets. Creditors and shareholders would be forced to take losses.

Earlier, Senate Majority Leader Harry Reid, D-Nev., blasted Republicans for holding up overall financial reform legislation, saying they were "making love to Wall Street," The Hill reported.