Wall Street Bailouts No Longer An Option, Regulator Says

The era of Wall Street bailouts is over, a top government regulator told Congress on Tuesday.
The financial reform legislation passed last summer bars future taxpayer rescues of financial firms, and it eliminates the need for bailouts by endowing regulators with greater powers, said Michael H. Krimminger, general counsel of the Federal Deposit Insurance Corporation, in testimony before the House Financial Services Committee. The new law, Krimminger said, should end the notion that some firms are too big to be permitted to fail.
But other experts who testified Tuesday challenged that vote of confidence. As law professors and another regulator spoke before the House committee, the hearing highlighted a central concern about the Dodd-Frank law: It may not change the way business is done on Wall Street. Despite requirements limiting firms' ability to take risks, some experts fear the financial system may continue to operate under the assumption that certain firms will be bailed out in times of crisis, in the event that other government efforts cannot stem collateral economic damage.
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