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PrintSeptember 28, 2008
Agreement reached on Mother of all Bailouts
No matter where you come down on this bailout, you are going to have to deal with the fact that the federal government is, to a large extent, taking over a big chunk of the financial services industry in America.
We, the taxpayer, will become part owners of these financial firms who are in trouble. And not just because of the massive amount of money we will be giving to these companies. A provision in the bailout bill requires that firms participating in the bailout issue warrants so that the government can obtain non voting shares of stock. This was at the insistence of the Democrats who also wrung some other concessions from Treasury Secretary Paulson and the Republicans:
The Democrats gave up the handout to ACORN and the nightmare idea of empowering banruptcy judges with the ability to alter mortgage contracts for consumers (the confusion would have thrown the court system into chaos say many experts).
We, the taxpayer, will become part owners of these financial firms who are in trouble. And not just because of the massive amount of money we will be giving to these companies. A provision in the bailout bill requires that firms participating in the bailout issue warrants so that the government can obtain non voting shares of stock. This was at the insistence of the Democrats who also wrung some other concessions from Treasury Secretary Paulson and the Republicans:
· The money would be dispersed in segments, with Paulson receiving $250 billion immediately, $100 billion upon White House certification of its necessity and the final $350 billion only after Congress has been given 15 days to object.
· Firms taking advantage of the bailout would be required to limit compensation for senior executives, with especially severe limits on "golden parachutes" at failing firms. The compensation limits will be enacted primarily, but not solely, through the tax code by reducing tax deductions for firms that pay executives more than $400,000 a year.
The administration also agreed to Democratic demands that the financial services industry should help pay for the program. Under the agreement, the president would be required to propose a fee on the industry if the government has not recovered its money through sales of the assets within five years.
The Democrats gave up the handout to ACORN and the nightmare idea of empowering banruptcy judges with the ability to alter mortgage contracts for consumers (the confusion would have thrown the court system into chaos say many experts).
Other details of the bill will become available once all the i's are dotted and t's crossed. Pelosi has promised to post it on the web for 24 hours before the vote.
The Democrats outnumbered Republicans in the talks 9-2. Why was that?
From 3 p.m. to 5:30 p.m., Conrad and other lawmakers met with Paulson around a massive table in Pelosi's conference room under an ornate portrait of Abraham Lincoln. Among lawmakers, Democrats outnumbered Republicans nine to two, an imbalance that so irritated Paulson that he called and complained to Senate Majority Leader Harry M. Reid (D-Nev.), according to three GOP sources familiar with the call.
Reid told Paulson he would not pull any of his colleagues out of the meeting. A Reid spokesman, Jim Manley, said: "If the secretary doesn't like it, that's just too bad, because he is going to need the help of each and every one of them to sell the president's plan to the Democratic caucus and the American people."
Ain't "bipartisanship" grand?
It appears to me that although there will probably be a few holdouts in the House GOP and a handful in the Senate, the rest of the Republicans are falling into line, terrified at what might happen if the markets open tomorrow with no agreement in hand. Paulson upped the ante during the negotiations by referring to a Treasury Department report that Wall Street might lose a third of its value next week if no agreement is reached.
But they're not trying to scare anyone, are they?
As part owner of JP Morgan, do you think they'll let me use the company jet?
