Conservatives say the Dodd Finance Bill means Wall Street Bailouts Forever. Progressives say the Dodd bill “makes bailouts impossible.” Who’s right? Well lets ask Treasury Secretary Timothy Geithner who described the bill this way in The Washington Post:

The Senate bill gives the government the authority to wind down the firm with no exposure to the taxpayer. No more bailouts. Instead, we will have a bankruptcy-like regime where equityholders will be wiped out and the assets will be sold.

“No more bailouts.” Sounds nice. But what does “bankruptcy-like regime” mean? Well, for starters, it means these firms will not actually go through bankruptcy. Instead the Dodd bill creates a new “orderly liquidation authority” that empowers the FDIC to liquidate the firm and wipe out shareholders. But the failing firm’s other creditors would still be eligible for a cash bailout. The situation is much like the scheme implemented for AIG in 2008, in which the largest beneficiaries weren’t stockholders, but rather other creditors, including foreign firms such as Deutsche Bank.

In fact here is how Secretary Geithner described the 2008 bailout of AIG to Congress: “We didn’t rescue AIG. We intervened so we could dismember it safely.”

And now, just this week, Secretary Geithner told The New York Timesabout the Dodd bill: “If a major institution manages itself to the edge of their abyss, we’re able to put them out of their misery … dismember them safely without taxpayers being exposed to a penny of risk of loss.”

In other words, if you liked the Geithner bailout of AIG, you are going to love Dodd’s Permanent Wall Street Bailout Bill.