Rescue Bill Revealed (Draft) - CNNMoney

[WillyT]

<snip>

NEW YORK (CNNMoney.com) -- The federal government would provide as much as $700 billion in a far-reaching plan to rescue the nation's troubled financial system, according to a draft of the proposed bill obtained by CNN. The legislation is still being negotiated and elements of the bill could still change.

The core of the bill is based on Treasury Secretary Henry Paulson's request for authority to purchase troubled assets from financial institutions so banks can resume lending and so the credit markets, now virtually frozen, can begin to operate more normally.

But Democrats and Republicans - concerned about the potential taxpayer cost - have added several conditions and restrictions. Key negotiators for the financial rescue plan will be busy trying to line up votes on Capitol Hill on Sunday to support the accord they reached soon after midnight.

Among the provisions of the draft bill:

* The $700 billion would be disbursed in stages, with $250 billion made available immediately for the Treasury's use.

* Curbs will be placed on the compensation of executives at companies that sell mortgage assets to Treasury. Among them, the bill would limit golden parachutes to executives at companies that participate; they will not be able to deduct the salary they pay to executives above $500,000.

* An oversight board will be created. The board will include the Federal Reserve chairman, the Securities and Exchange Commission chairman, the Federal Home Finance Agency director and the Housing and Urban Development secretary.

* Treasury is allowed the option to take ownership stakes in participating companies under certain circumstances.

* Treasury may establish an insurance program - with risk-based premiums paid by the industry - to guarantee companies' troubled assets, including mortgage-backed securities, purchased before March 18, 2008.

Lawmakers' goal is to shore up a deal before financial markets around the world open on Sunday evening.

Treasury Secretary Henry Paulson first announced the administration would seek an economic bailout plan on Sept. 18, after meeting with key lawmakers in the House and Senate - a meeting that left lawmakers looking ashen when they spoke to the press afterwards.

If enacted, the rescue plan would be the most dramatic and extensive government intervention in the economy since the Great Depression. President Bush on Sept. 24 gave a prime-time address to the nation in which he urged lawmakers to pass his plan and warned that the "entire economy is in danger."

<snip>

Link: http://money.cnn.com/2008/09/28/news/economy/Sunday_talks_bailout/index.htm?cnn=yes

Can't wait to read the fine print... ya know?

:shrug:

[Pale Blue Dot]

1. I'm already deeply concerned about this passage:

(e) PREVENTING UNJUST ENRICHMENT.—In making purchases under the authority of this Act, the Secretary shall take such steps as may be necessary to prevent unjust enrichment of financial institutions participating in a program established under this section, including by preventing the resale of a troubled asset to the Secretary at a higher price than what the seller paid to purchase the asset. This subsection does not apply to troubled assets acquired in a merger or acquisition, or a purchase of assets from a financial institution in conservatorship or receivership, or that has initiated bankruptcy proceedings under title 11, United States Code.
SEC. 102. INSURANCE OF TROUBLED ASSETS

This passage says that the Fed can't purchase the assets at a price MORE than what the institutions paid for them. This makes sense - of course the financial institutions shouldn't profit from the sale of these assets. The problem in that these assets are currently worth SIGNIFICANTLY less than the financial institutions paid for them. The bill makes it legal for the Fed to buy the assets AT THE PRICE THE INSTITUTIONS PAID FOR THEM. That would be a terrible deal for the American people.

I haven't read the whole bill yet, so it's not out of the question that this is addressed later in it.

[snappyturtle]

2. Definitely not a good idea. How do they come up with this stuff? nt

[99th_Monkey]

3. Talk about a "fig leaf": this bill's provision for "oversight" is a freaking joke.

Unless I'm mistaken, every last one of these "overseers" are the same Bush-appointed rat bastards that got us into this mess
in the first place, no? ˙Why in the world would Democrats support this provision sans Congressional bi-partisan oversight?

An oversight board will be created. The board will include the Federal Reserve chairman, the Securities and Exchange Commission chairman, the Federal Home Finance Agency director and the Housing and Urban Development secretary.

[aquart]

5. You notice that, too?

And I'm sure they'll have plenty of spare time to go over complex transactions, won't they?


Have the Asian markets opened yet?

[magellan]

4. I really don't know what people are expecting

Every single entity the Dems are "compromising" with are the same entities that got us here. BushCo, the GOP, and through them by proxy, the financial industry.

Spock could compute the specific numerical odds of all these bad actors having a sudden change of heart and putting the interests of the country before their own, but I can sum it up in one word: NIL.

[aquart]

6. There was no need to compromise.

THEY are the ones who need the bailout. It was up to them to agree with US, not the other way around.

[magellan]

7. You don't have to convince me

I think the Dems played their hand with their usual skill...which is to say, very badly. :shrug:

[Two Americas]

9. compromise?

There was no need to compromise, but this is much worse than that.

This was a golden opportunity to take the fight to the right wingers, to smash them once and for all, and to bring millions of working class people back to the party; it was an opportunity to win big in November, and to go into office with massive public support.

It was an opportunity to lead the suffering American people out of the Reaganomics nightmare.

[Tierra_y_Libertad]

8. Cheap lipstick on an expensive pig.