House Amendment Poses Threat to Lending Liquidity

On the same day that Treasury Secretary Tim Geithner was in downtown Washington calling on banks to boost lending, up on Capitol Hill the House Financial Services Committee passed an amendment to that would do just the opposite.

At an Obama administration summit on strengthening credit flows to small businesses, Geithner said “We need banks to be working with us, not against recovery." At the very same time on Wednesday, an amendment from Reps. Brad Miller and Dennis Moore would allow the FDIC to impose a 20 percent haircut on all secured creditors, including the 12 Home Loan banks, when resolving systemically important institutions that fail.