House Budget Committee Chairman Rep. Paul Ryan, R-Wis., speaks about his budget plan, Tuesday, March 20, 2012, during a news conference on Capitol Hill in Washington. (AP Photo/Jacquelyn Martin)   The 2013 House Republican budget – released last week by Budget Committee Chairman Paul Ryan – includes a significant amount of language meant to convince readers that the GOP is really fed up with “crony capitalism” and, more emphatically, bailouts. And the Republicans reserve special ire for the Dodd-Frank financial reform law signed by President Obama in 2010, calling it a continuation of the bailout culture.

“While the authors of the Dodd–Frank Act went to great lengths to denounce bailouts, this law only sustains them,” the budget reads. “Developments in the area of financial–services regulation, including the Dodd-Frank Act…will further deter economic expansion, invite political corruption and degrade self-government.”

But while House Republicans call for repealing their other big target, President Obama’s health care reform law, in its entirety, they leave most of the Dodd-Frank law alone. For instance, the much-maligned Consumer Financial Protection Bureau didn’t merit a mention in the budget, even though the Republicans fought against it tooth-and-nail during the Dodd-Frank debate. Neither did the new regulatory regime for derivatives. Ditto for the Volcker rule, meant to rein in banks’ risky trading.

Instead, the Republican budget calls for repealing what’s known in Dodd-Frank as “resolution authority”: the mechanism for dismantling failing financial firms without resorting to the ad hoc bailouts of 2008. And this specific targeting leaves little doubt that the Republicans have far more interest in pledging fealty to the financial services industry than in truly eliminating bailouts or avoiding a repeat of the 2008 financial crisis.

It’s worth revisiting the situation in September 2008 for just a moment. By the middle of that month, Lehman Brothers had declared bankruptcy, while Merrill Lynch had been sold, shotgun-wedding style, to Bank of America. In the wake of Lehman’s collapse, credit froze. Just days later, mega-insurer American International Group received a $85 billion bailout from the Federal Reserve when it became clear that the firm couldn’t honor billions of dollars in credit default swaps.

Wall Street was panicked and the financial system was on the verge of melting down. To combat the impending collapse, then-Treasury Secretary Hank Paulson and the Bush administration rolled out the publicly reviled Troubled Asset Relief Program (TARP). While initially planned as an asset-purchasing program – under which the government would buy so-called toxic assets from the nation’s biggest banks – TARP turned into a straight injection of capital into those firms. It was a handout with few strings attached. "I’ve abandoned free-market principles to save the free-market system," President Bush said a few months later.

Lehman’s collapse had shown that Wall Street’s behemoths were too large and intertwined with each other to enter into a traditional bankruptcy without causing significant liquidity problems and destabilizing financial markets. So the government was left with the unenviable choice of injecting capital directly into the banks, thereby keeping them afloat, or risking another Great Depression.

To address this problem, Dodd-Frank gives the government resolution authority. Under the law, if a failing financial institution is deemed too systemically entangled for traditional bankruptcy, it gets puts into a receivership under the Federal Deposit Insurance Corporation, after receiving approval from a panel of bankruptcy judges. Any loss the taxpayers face from financing that bankruptcy is recouped from selling the firm’s assets.

Resolution authority is designed to be a clear alternative to the approach to which the government was limited in 2008. And it would apply to non-bank entities as well, meaning that the AIG’s of the world could be safely dissolved, rather than preserved as financial zombies. Importantly, Dodd-Frank bars the use of taxpayer money to preserve a financial firm: the funds can only be used to ease a firm through its dissolution. Rep. Barney Frank actually characterized resolution authority as “death panels” for financial institutions. “We are talking about dissolution, not resolution. We are talking about making it unpleasant for the entities. This is not a fate people will want,” Frank said.

This new power, of all things, is the one that the Republican budget calls for repealing. During the Dodd-Frank debate, House Republicans were very fond of calling resolution authority a “permanent bailout authority,” and their budget adopts that language, saying, “This Budget would end the bailout regime enshrined into law by the Dodd–Frank Act.” Last year’s Republican budget called for the same thing. (The official Dodd-Frank alternative put forth by the Republicans included a similar provision for doing away with failing banks.)

The biggest financial services lobbying groups — including the American Bankers Association and the Financial Services Roundtable — oppose resolution authority, though recently, they have focused their lobbying efforts recently on higher-profile regulations like the Volcker Rule. But the industry has shown its appreciation for the Republican efforts to roll back Dodd-Frank, giving money in heaps to the GOP.

In the 2012 election cycle, securities and investment firms have given 61 percent of their donations to GOP-affiliated candidates and outside groups, according to data compiled by the Center for Responsive Politics. For Goldman Sachs, 58 percent of donations have gone to the GOP. For Morgan Stanley, it’s two-thirds.

When it comes to commercial banks, the breakdown is even more tilted towards Ryan and co., with 70 percent of donations going to the GOP. The American Bankers Association has given three-quarters of its money to Republicans. PNC Bank and Bank of America barely trail, at 73 percent and 70 percent, respectively. Citigroup and Wells Fargo both give the majority of their donations to Republicans as well. The repeal of resolution authority – taking away the biggest weapon that the government has in its arsenal for dealing with a failing firm – would surely make those donations well worth the cost.

Of course, there is no assurance that resolution authority would work in the event of a repeat of 2008. Whoever is at the helm of the nation’s regulatory system if that day comes will need to muster the nerve to pull the trigger and resolve a firm, rather than simply bailing it out.  But it’s undeniable that resolution authority is an improvement over the tools that the government formerly had at its disposal.

In fact, Paulson has said that the resolution authority power in Dodd-Frank would have been useful during the crisis in 2008. “We would have loved to have something like this for Lehman Brothers. There’s no doubt about it,” Paulson said. Federal Reserve Chairman Ben Bernanke has echoed those remarks, saying, “if a federal agency had had such tools on September 16, they could have been used to put AIG into conservatorship or receivership…That outcome would have been far preferable.”

Instead, House Republicans have put forth a budget that, in addition to disintegrating the social safety net, would set the government up for the same choice it faced in 2008 when the nation’s biggest banks were poised to fall: bail them out or let a financial meltdown simply take its toll.