Bailout Text Summary

Here is summary text of the bailout agreement, via Nancy Pelosi’s office. Boasting about cutting the Paulson $350-billion is specious, as is crowing about the Democrats requiring reforms. I hate politics.

REINVEST, REIMBURSE, REFORM

IMPROVING THE FINANCIAL RESCUE LEGISLATION

Significant bipartisan work has built consensus around dramatic improvements to the original Bush-Paulson plan to stabilize American financial markets — including cutting in half the Administration’s initial request for $700 billion and requiring Congressional review for any future commitment of taxpayers’ funds. If the government loses money, the financial industry will pay back the taxpayers.

3 Phases of a Financial Rescue with Strong Taxpayer Protections

* Reinvest in the troubled financial markets … to stabilize our economy and insulate Main Street from Wall Street * Reimburse the taxpayer … through ownership of shares and appreciation in the value of purchased assets * Reform business-as-usual on Wall Street … strong Congressional oversight and no golden parachutes

CRITICAL IMPROVEMENTS TO THE RESCUE PLAN

Democrats have insisted from day one on substantial changes to make the Bush-Paulson plan acceptable — protecting American taxpayers and Main Street — and these elements will be included in the legislation

Protection for taxpayers, ensuring THEY share IN ANY profits

* Cuts the payment of $700 billion in half and conditions future payments on Congressional review * Gives taxpayers an ownership stake and profit-making opportunities with participating companies * Puts taxpayers first in line to recover assets if participating company fails * Guarantees taxpayers are repaid in full — if other protections have not actually produced a profit * Allows the government to purchase troubled assets from pension plans, local governments, and small banks that serve low- and middle-income families

Limits on excessive compensation for CEOs and executives

New restrictions on CEO and executive compensation for participating companies:

* No multi-million dollar golden parachutes * Limits CEO compensation that encourages unnecessary risk-taking * Recovers bonuses paid based on promised gains that later turn out to be false or inaccurate

Strong independent oversight and transparency

Four separate independent oversight entities or processes to protect the taxpayer

* A strong oversight board appointed by bipartisan leaders of Congress * A GAO presence at Treasury to oversee the program and conduct audits to ensure strong internal controls, and to prevent waste, fraud, and abuse * An independent Inspector General to monitor the Treasury Secretary’s decisions * Transparency — requiring posting of transactions online — to help jumpstart private sector demand

Meaningful judicial review of the Treasury Secretary’s actions

Help to prevent home foreclosures crippling the American economy

* The government can use its power as the owner of mortgages and mortgage backed securities to facilitate loan modifications (such as, reduced principal or interest rate, lengthened time to pay back the mortgage) to help reduce the 2 million projected foreclosures in the next year * Extends provision (passed earlier in this Congress) to stop tax liability on mortgage foreclosures * Helps save small businesses that need credit by aiding small community banks hurt by the mortgage crisis—allowing these banks to deduct losses from investments in Fannie Mae and Freddie Mac stocks


Originally published at Paul Kedrosky blog and reproduced here with the author’s permission.

9 Responses to "Bailout Text Summary"

  1. Guest   September 28, 2008 at 4:51 pm

    If Bush likes it : NO GOOD If House Republicans who believe in the constitution like it: Then the chips can fall where they may. Anyway it is THE UNITED SOCIALIST STATES OF AMERICA and the constitution,free market jargon have all been flushed down the toilet. The hostage taking blackmailing of the american people has succeeded

  2. Anonymous   September 28, 2008 at 9:48 pm

    I feel I am witnessing the end of the The United States and the start of the Socialist Dictatorship of North America under the First Emperor Obama. As you could see from his convention he wasn’t hiding what he though he was. Greek colums no Greece was a democracy, he was showing you an Emperor before his palace.All Hail Obama The First

  3. lipstickonaturd   September 29, 2008 at 1:21 am

    The Bush Administration proposes overpaying for junky mortgage based assets, and the Democrats improve upon it by allowing homeowners not to pay back their mortgages. This bailout is just a race to see which party can rip off taxpayers most.

  4. Guest   September 29, 2008 at 4:36 am

    Both candidates are a HORROR IN THE MAKING. Vote HR 2755 Abolish FRB nationalize the central bank.The country is in this mess because of the FRB.The FRB functions for its private interests moresotoday as in 1929.

  5. Guest   September 30, 2008 at 3:52 pm

    Why should people who caused this mess (Frank, Dodd, et al) be in charge of the “fix”? They have no credibility and no faith in the free market system (also known as capitalism).

  6. Anonymous   September 30, 2008 at 9:36 pm

    I have just finished reading the text of the original bailout legislation. It has no explicit salary caps for executives, it does not limit the bailout to a one time event, it raises the national debt ceiling by 4x the bailout, it exempts transactions below $100M from the legislation creating a back door slush fund for the Treasury Secretary, and it places no explicit requirements on him to do anything measurable.