NPR logo The 'Hotel California' Clause: Finance Reform Meets Classic Rock


The 'Hotel California' Clause: Finance Reform Meets Classic Rock

Chris Dodd

Chris Dodd: The sixth Eagle. (NPR Photo Illustration/AP photos) hide caption

toggle caption (NPR Photo Illustration/AP photos)

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.



Please keep your community civil. All comments must follow the Community rules and terms of use, and will be moderated prior to posting. NPR reserves the right to use the comments we receive, in whole or in part, and to use the commenter's name and location, in any medium. See also the Terms of Use, Privacy Policy and Community FAQ.