Does House Minority Whip Roy Blunt know the bill's details? [someone] | Main | Football Thread
September 28, 2008

Bailout Details

More information on the compromise bailout "intervention" is coming out now. Congressman Roy Blunt provided a comparison of the new bill to the Paulson proposal and the Dodd proposal. Just ignore the editorializing.

To summarize, Paulson wanted Treasury to buy mortgage-backed securities without Congressional oversight and to protect Treasury decisions from judicial review.

Dodd wanted Treasury to buy mortgage-backed securities, other non-mortgage-related assets (including pension plans), and contingent shares of financial institutions. He also wanted Congressional oversight of the new Treasury program with judicial review. He also wanted to tack on provisions allowing bankruptcy judges to rewrite mortgages to protect defaulting homeowners. He also wanted to funnel money to housing programs. And he wanted to cap executive compensation.

So in the compromise bill Treasury gets the power to buy mortgage-backed securities, other non-mortgage-related assets, and contingent shares. Congress will have oversight and there will be judicial review. Bankruptcy judges won't get to rewrite mortgages, but there will be a separate program allowing the government to purchase failing mortgages and rewrite them to give defaulting homeowners better terms. Executive compensation will be capped. And we're adding a "pay to play" insurance program.

If we have to do something, this bill is certainly sounds better than the other proposals. But the inclusion of non-mortgage-related assets is a problem. The point of the bailout is to give banks a second chance on their poor investment in these mortgage-backed securities. Why open the door to all these other assets? We are just giving institutions a free pass on all their poor investment strategies.

Congress wants to style this as an "intervention", not a bailout. Bullshit semantics.

MORE: We won't know until we see the actual bill, but I'm curious what Congress plans to do with the non-mortgage-related assets. Are those going to be auctioned back into the market? Presumably, only the opaque mortgage-backed securities need to be scrubbed and then properly valued. So why the need to buy other assets? What do those assets have to do with the "credit logjam" that precipitated the bailout.

I also want to know what Congress plans to do with the equity warrants, should Treasury use them. Under the terms of the AIG bailout, the government owns owns and controls the 79.9% of company.

So.... I take back what I said about the Fed not actually owning AIG. It does. And it will, because there is no provision for the redemption of the preferred shares if the loan is paid back.

Is that the future of all the financial institutions which participate in the bailout?

digg this
posted by Gabriel Malor at 01:34 PM

| Access Comments

Recent Comments
t-bird: "[i]Russian: Yob tyovu mat. [/i] Spanish hello: ..."

Christopher R Taylor: "[i]IMO Russia is in the Robber Baron phase of Capi ..."

Gem: "6 She's a pretty Ginger. No way she's Russian. Po ..."

platypus, gg channel: "Didn't she become a missionary or something? ..."

Mr Aspirin Factory: "The CEO of Mylan Labs (epipens) is Joe Manchin's d ..."

Christopher R Taylor: "[i]Russian: Yob tyovu mat. [/i] Privet. Use pr ..."

The Mole People: "'If'n ya want to know you'll just have to come.' ..."

BurtTC: "Pretty? I'm pretty sure that's a dude. ------- ..."

bluebell: "The best clip was this Mark Warner w/ spittle hang ..."

Miklos, optically observing: "The best clip was this Mark Warner w/ spittle hang ..."

grammie winger: "Goodnight Farmer. ..."

Tom Servo: "IMO Russia is in the Robber Baron phase of Capital ..."

Recent Entries

Polls! Polls! Polls!
Frequently Asked Questions
The (Almost) Complete Paul Anka Integrity Kick
Top Top Tens
Greatest Hitjobs

The Ace of Spades HQ Sex-for-Money Skankathon
A D&D Guide to the Democratic Candidates
Margaret Cho: Just Not Funny
More Margaret Cho Abuse
Margaret Cho: Still Not Funny
Iraqi Prisoner Claims He Was Raped... By Woman
Wonkette Announces "Morning Zoo" Format
John Kerry's "Plan" Causes Surrender of Moqtada al-Sadr's Militia
World Muslim Leaders Apologize for Nick Berg's Beheading
Michael Moore Goes on Lunchtime Manhattan Death-Spree
Milestone: Oliver Willis Posts 400th "Fake News Article" Referencing Britney Spears
Liberal Economists Rue a "New Decade of Greed"
Artificial Insouciance: Maureen Dowd's Word Processor Revolts Against Her Numbing Imbecility
Intelligence Officials Eye Blogs for Tips
They Done Found Us Out, Cletus: Intrepid Internet Detective Figures Out Our Master Plan
Shock: Josh Marshall Almost Mentions Sarin Discovery in Iraq
Leather-Clad Biker Freaks Terrorize Australian Town
When Clinton Was President, Torture Was Cool
What Wonkette Means When She Explains What Tina Brown Means
Wonkette's Stand-Up Act
Wankette HQ Gay-Rumors Du Jour
Here's What's Bugging Me: Goose and Slider
My Own Micah Wright Style Confession of Dishonesty
Outraged "Conservatives" React to the FMA
An On-Line Impression of Dennis Miller Having Sex with a Kodiak Bear
The Story the Rightwing Media Refuses to Report!
Our Lunch with David "Glengarry Glen Ross" Mamet
The House of Love: Paul Krugman
A Michael Moore Mystery (TM)
The Dowd-O-Matic!
Liberal Consistency and Other Myths
Kepler's Laws of Liberal Media Bias
John Kerry-- The Splunge! Candidate
"Divisive" Politics & "Attacks on Patriotism" (very long)
The Donkey ("The Raven" parody)
Powered by
Movable Type 2.64