By Jacob Goldstein
The finance-reform proposal Chris Dodd just put out has an unexplained classic rock allusion at the bottom of page three:
No Evasion: Large bank holding companies that have received TARP funds will not be able to avoid Federal Reserve supervision by simply dropping their banks. (the Hotel California Provision)
What's this mean? Goldman Sachs and other investment banks converted to bank holding companies during the financial crisis. This gave them access to funding from the Fed, but it also made them subject to greater oversight by the Fed.
So what this part of the bill says is that, even if these institutions get rid of their bank holding companies, they'll still be subject to Fed oversight.
Or, to paraphrase the Eagles: Goldman Sachs can check out any time it likes, but it can never leave.