Bipartisan Bailout Bill

Reuters News Service has an early, useful summary of key provisions of the bipartisan "Emergency Economic Stabilization Act of 2008" announced late this afternoon. These include --

• $700 billion in buying power would be doled out by Congress in stages. After the first $250 billion is authorized, the President could request another $100 billion. The final $350 billion could be cleared by a further act of Congress.
  
• The government will take a stake in companies that tap federal aid so that taxpayers can share in the profits if those companies get back on their feet. An exception applies to financial firms with less than $500 million in assets or if the government buys less than $100 million of soured investments.
• If a company receives aid but fails, the government will be one of the last investors to see a loss.
• A new congressional panel would have oversight power and the Treasury secretary would report regularly to lawmakers in two elements of a multi-level oversight apparatus.
• If the Treasury takes a stake in a company, the top five executives would be subject to limits on their compensation.
• Executives hired after a financial company offloads more than $300 million in assets will not eligible for "golden parachutes."
• Would permit the Federal Reserve to begin paying interest on bank reserves, giving it another tool for easing credit strains.
• Mandates a study on the impact of mark-to-market accounting standards, that critics blame for a downward spiral in the valuation of assets on corporate balance sheets.
• The federal government may stall foreclosure proceedings on home loans purchased under the plan.
• Alongside the plan to buy securities outright, the Treasury Department will conceive an alternative insurance program that would underwrite troubled loans and would be paid for by participating companies.
• If the government has taken losses five years into the program, the Treasury Department will draft a plan to tax the companies that took part to recoup taxpayer losses.

The full text of the bipartisan bailout bill announced this afternoon is available at:

http://financialservices.house.gov/

Worldwide interest is so intense that the servers are extremely busy right now, so be patient and try again later if you can't get through. Mirror sites are popping up by the minute. Here are some of them (to be supplemented as time permits):

Senate Banking Committee (pdf format, 109 pp.)

Washington Post

Huffington Post

Public Markup.org

New York Times [pdf]

Los Angeles Times [pdf]

C-Span [pdf]

For the official "section by section analysis" click here.


One note about last night's negotiations: In answer to a question from the press, Speaker Nancy Pelosi said at the end of the joint news conference late Sunday afternoon that "great resistance" to limiting CEO "golden parachute" pay was mounted by Republicans. A large faction of conservative GOP congressmen declared themselves strongly opposed to any law that would impose a penalty tax on any corporation that (1) sought cash from the Treasury Department under this rescue bill, and then (2) used some (or all) of it to fashion a golden parachute for their top executives.

What changed their minds? They backed off when Pelosi threatened to use the power of her office to ensure that there would be a roll-call vote, in effect guaranteeing that everyone in the world would know the names of the rabid free-market Republicans who wanted to invite Wall Street tycoons to suckle for free at the teat of the American taxpayer.

That kind of transparency terrified the Republicans, and so they backed off.