The Main Points And The Compromises
- A breakthrough came Saturday night, with the addition of a requirement sought by centrist Democrats and Republicans to ensure that the government be paid back by companies that got help. The president would have to tell Congress after five years how he planned to recoup the losses.
- Another key bargain – this time to draw Republican support – allows, but doesn’t require, government to insure some bad home loans rather than buy them. That’s designed to limit the amount of federal money used in the rescue.
- …Barack Obama sought credit for taxpayer safeguards added to the initial proposal from the Bush administration. Later, at a rally in Detroit, Obama said, “it looks like we will pass that plan very soon.”
- The rescue would only be open to companies who deny their executives “golden parachutes” and limit their pay packages. Firms that got the most help through the program – $300 million or more – would face steep taxes on any compensation for their top people over $500,000.
- The government would receive stock warrants in return for the bailout relief, giving taxpayers a chance to share in recipients’ future profits.
- To help struggling homeowners, the plan would require the government to try renegotiating the bad mortgages it acquires with the aim of lowering borrowers’ monthly payments so they can keep their homes.
- But Democrats surrendered other cherished goals: letting judges rewrite bankrupt homeowners’ mortgages and steering any profits gained toward an affordable housing fund.
Here are more details:
- -EXECUTIVE PAY. Restrictions would be imposed on the compensation received by executives whose companies sell some of their bad assets through the government’s purchase program. There would be tax restrictions on executive pay over $500,000 and limits on so-called “golden parachutes” for executives who leave the companies getting government bailouts.
- -OVERSIGHT. The Treasury will be required to provide details of its purchases of bad assets within two days of the transaction. Oversight boards would be created including one with members selected by Democratic and Republican leaders in the House and Senate and one that will include top government officials.
- -TAXPAYER PROTECTION. Taxpayers would be given ownership stakes in companies whose bad assets are purchased and after five years if the government is facing a loss in the program then the president will be required to submit a plan on how to recoup a portion of the losses from the companies that participated in the program.
- A proposal floated that did not make the final version of the bill:- HELP FOR TROUBLED HOMEOWNERS. They failed in an effort to give judges the power to modify mortgage terms for people who have filed for bankruptcy and Democrats were unable to get approval for part of any profits the government might receive to go to help people facing mortgage defaults.
Copyright 2008 Liberaland