Congress Makes Wall Street Bailout Bill Public at Financial Services Website of the house – financialservices.house.gov and speaker.gov

by Trendy

The US Congress has made public its proposed Wall Street bailout bill. The bill can be viewed at the house’s financial services webpage at financialservices.house.gov and the speaker’s website at speaker.gov

Congress has made some changes to the proposed rescue package of the Bush administration by adding a set of conditions and restrictions to the bailout bill. This has mainly been done to keep a check and get proper accountability of the spending of taxpayer’s money. Treasury Secretary Henry Paulson has requested a blank check of $700 billion that would allow the government to step in and buy bad mortgage loans from troubled companies of Wall Street.

Some key provisions of this bill that has been made public for the American people to read at www.financialservices.house.gov and www.speaker.gov, include :

* 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, companies that participate 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 14, 2008.
* One provision requires the president to propose legislation to recoup losses from the financial industry if the rescue plan results in net losses to taxpayers five years after the plan is enacted.

The House Speaker Nancy Pelosi says this is not a ‘Bailout Bill’ but rather a “buy-in” to help turn around the America economy. Only time will tell if this “buy-in” will payoff or not.

Here is a complete SUMMARY OF THE “EMERGENCY ECONOMIC STABILIZATION ACT OF 2008” as obtained from the www.house.gov website.

I. Stabilizing the Economy
The Emergency Economic Stabilization Act of 2008 (EESA) provides up to $700 billion to the Secretary of the Treasury to buy mortgages and other assets that are clogging the balance sheets of financial institutions and making it difficult for working families, small businesses, and other companies to access credit, which is vital to a strong and stable economy. EESA also establishes a program that would allow companies to insure their troubled assets.

II. Homeownership Preservation
EESA requires the Treasury to modify troubled loans – many the result of predatory lending practices – wherever possible to help American families keep their homes. It also directs other federal agencies to modify loans that they own or control. Finally, it improves the HOPE for Homeowners program by expanding eligibility and increasing the tools available to the Department of Housing and Urban Development to help more families keep their homes.

III. Taxpayer Protection
Taxpayers should not be expected to pay for Wall Street’s mistakes. The legislation requires companies that sell some of their bad assets to the government to provide warrants so that taxpayers will benefit from any future growth these companies may experience as a result of participation in this program. The legislation also requires the President to submit legislation that would cover any losses to taxpayers resulting from this program from financial institutions.

IV. No Windfalls for Executives
Executives who made bad decisions should not be allowed to dump their bad assets on the government, and then walk away with millions of dollars in bonuses. In order to participate in this program, companies will lose certain tax benefits and, in some cases, must limit executive pay. In addition, the bill limits “golden parachutes” and requires that unearned bonuses be returned.

V. Strong Oversight
Rather than giving the Treasury all the funds at once, the legislation gives the Treasury $250 billion immediately, then requires the President to certify that additional funds are needed ($100 billion, then $350 billion subject to Congressional disapproval). The Treasury must report on the use of the funds and the progress in addressing the crisis. EESA also establishes an Oversight Board so that the Treasury cannot act in an arbitrary manner. It also establishes a special inspector general to protect against waste, fraud and abuse.

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