Newest Outline of U.S. Congress’ draft bank bailout plan

September 27, 2008 by · 2 Comments
Filed under: Economic News 

Well as I have said I do not believe in this plan on a fundamental and precedent setting basis going forward. This is intervention plan and simple, interferes with the free-market and rewards companies for making bad decisions and instead buys their bad investments. This is corporate welfare and only rewards these companies in the end because these prices levels are unsustainable and the U.S. taxpayer is maxed out and will not be able to pay down all these mortgages. The recession will still happen because we have not address the real underling issues such are middle-class job creation, international trade imbalance not in favor of America, federal budget deficits and a debt based monetary system. If you don’t believe me then go about your business and watch and maybe magically all these things I stated will be solved or maybe will just go away.

New Outline of U.S. Congress’ draft bailout plan:

U.S. lawmakers pressed forward on Saturday with talks over a proposed massive financial system bailout, hoping to nail down an agreement by Sunday.

The Bush administration last week asked Congress to give the Treasury secretary authority to buy up to $700 billion in bad assets from banks and other companies in a bid to ease the most serious U.S. financial crisis since the Great Depression.

Following are provisions compromise legislation is expected to incorporate, based on a draft bill and comments from lawmakers about the state of negotiations.

– The bill would create a Troubled Assets Relief Program (TARP) to purchase mortgage-related assets originated or issued on or before March 14, or any assets if needed to promote financial stability.

– $700 billion overall to be authorized in installments of $250 billion. That could be increased to $350 billion upon notification to Congress by the president.

– Assets could be purchased from any financial institution having significant operations in the United States.

– Government to get warrants for equity in participating companies as a way of protecting taxpayers and allowing them to benefit from any profit gains.

– Foreclosure mitigation for Americans at risk of losing home. However, a provision House Democrats had sought to help save homes in bankruptcy proceedings has been dropped.

– Restrictions on executive compensation at companies that participate.

– Incorporates House Republican proposal to allow for private-sector funded mortgage insurance program as an option for Treasury secretary.

– Financial Stability Oversight Board comprised of the chairmen of the Federal Reserve, Securities and Exchange Commission and Federal Deposit Insurance Corp, and two members appointed by Congress to oversee activities of the program.

– Requires a government investigation into causes of crisis, with report delivered to Congress by June 2009.

– Regular and detailed reports on transactions and other activities under the rescue program.

– Establishes a congressional oversight panel that would also submit a report on regulatory reform no later than Jan. 20, 2009, the date a new president takes office.

– Would direct 20 percent of any future profits from the bailout fund to the Affordable Housing Fund and the Capital Magnet Fund to meet U.S. housing needs. House Republicans, however, have made clear they oppose this provision.

– Authorizes a temporary money market mutual fund guarantee program for up to one year. Requires U.S. Treasury to restore any funds to the Exchange Stabilization Fund that had been used for that purpose and prohibits their further use.

– Requires federal financial regulatory agencies to cooperate with federal law enforcement to investigate fraud or misrepresentation with respect to financial products.

– Investors who sold preferred stock in mortgage finance giants Fannie Mae and Freddie Mac between Jan.
1, 2008, and before Sept. 7, 2008, to pay higher ordinary income taxes on any gains rather than the lower capital gains tax. The government announced the seizure of Fannie Mae and Freddie Mac on Sept. 7.

Comments

2 Responses to “Newest Outline of U.S. Congress’ draft bank bailout plan”
  1. Elijah says:

    I am amazed that this is a country for the people yet I don’t know anybody who wants this to happen.

    Who exactly said they could do this? Certainly not the American people.

  2. Brother_Stephen says:

    Can anyone tell me why there is preferred stock? Just the fact there is preferred stock, suggests there is a tilted playing field. I think ?I should probably get out of stocks.

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