[Vision2020] Rescue Bill Revealed

[Tom Hansen]

>From CNN at:

http://www.cnn.com

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Rescue bill revealed
Proposed legislation details plan to enact historic bailout of nation's 
financial system.

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.

- Allow for the Treasury to receive 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."

The aim of the rescue is to unfreeze the credit markets - short-term 
lending among banks and corporations. The core of the problem is bad real 
estate loans that have led to record foreclosures when the housing bubble 
burst and home prices declined.

In the past two weeks, the banking world and Wall Street have been 
reordered by a wave of collapses and corporate mergers. The most recent 
development was the seizure by federal regulators on Thursday night of 
Washington Mutual, once the nation's largest thrift and a major mortgage 
lender.

Pain on Main Street, risk to taxpayers
The chill of the credit freeze has been felt far beyond Wall Street, as 
well. Businesses large and small have seen the cost of borrowing spike 
higher.

At the same time, the scale of the administration's plan - and the quick 
pace of the debate over it - has given pause to many Americans and 
lawmakers worried about its potential cost to taxpayers.

"We begin with a very important task, a task to stabilize the markets, to 
protect all Americans - and do it in a way that protects the taxpayer to 
the maximum extent possible," Paulson said early Sunday morning.

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Seeya round town, Moscow.

Tom Hansen
Moscow, Idaho
 
"We're a town of about 23,000 with 10,000 college students. The college 
students are not very active in local elections (thank goodness!)."

- Dale Courtney (March 28, 2007)


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