Senate Dems Release Their Bailout Plan

The Post's Lori Montgomery reports on the Democrat-controlled Senate bailout proposal:

The Senate Democrats' plan calls for the creation of an emergency oversight board composed of the Fed, FDIC and SEC, plus two outside experts appointed by Congress. It also calls for the Treasury secretary to make monthly reports to Congress, including financial statements.

Treasury would have to report every Friday on the plan, publicly stating the total value of assets purchased during the week and the total value of assets held.

Like the House proposal, the Senate plan contains the same language about restricting executive compensation as the House does. It also would require the Treasury to attempt to reduce the number of foreclosures by rewriting bad mortgages and forgiving a portion of the debt.

Unlike the House proposal, the Senate plan completely rewrites the Treasury's bailout language, placing new conditions on the types of assets Treasury may purchase and new requirements on what it must receive in return. For example, the Senate plan would require any firm taking advantage of the bailout to give the Treasury "contingent shares" equal in value to the price Treasury pays for their assets.

The provision is intended to help ensure that taxpayers will recover their money.

The Senate proposal also contains many details likely to anger Republican lawmakers, which could bog the measure down. For example, while some Republicans have asked that any profits from the sale of the assets be dedicated to deficit reduction, the Senate proposal would set aside 20 percent of any profits on each sale for Democratic priorities, such as an affordable housing fund.

The Senate plan would also require Treasury to implement a program of "systemic homeowner assistance" through which the mortgages underlying purchases assets can be modified to help homeowners avoid foreclosure.

The Senate proposes to sunset the program on Dec. 31, 2009 -- one year sooner than Paulson proposed -- unless the Treasury secretary can persuade Congress that an extension is necessary.

The Senate proposal also would direct the Government Accountability Office to complete a study by June 2009 that explores what role the Fed, the Treasury Department, the SEC and banking regulators played in the meltdown, and whether federal regulators failed to use their powers to "curtail excessive leveraging."


All three major Wall Street markets are now down, with the Dow off 196 points.

--Sara Goo

September 22, 2008; 12:05 PM ET  | Category:  business
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Comments

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Thank god that both houses are showing some ba#$.

Posted by: Anonymous | September 22, 2008 12:26 PM

Let the DOW float. Our Congress needs to avoid pressure to write ANY blank checks here. The language coming out of the White House sounds awfully familiar - I feel like I woke up and it's 2003 again. I'm waiting to hear about mushroom clouds.

Posted by: CarolBG | September 22, 2008 12:54 PM

'anger Republican lawmakers'?

That political party should be abolished.

The Democrats will do as they usually do, push limply, get nothing except meaningless concessions and approve the Republican legislation. That's what Democrats do. They can't help themselves. After eight years as abused spouses, they are used to it though. Unfortunately, we are not. We know it is coming but at least we still do not like it.

The 'Worst Congress Ever' now wallows down there in the slop with the 'Worst President Ever.'

Posted by: Patriot3 | September 22, 2008 12:56 PM

THE RETHUGS AND PAULSON/BUSH/MClAME, are warning us, not to change the package they want!
the american people say, go to he*l!

Posted by: Andrea D Hussein Davies | September 22, 2008 1:10 PM

>>" ... rewriting bad mortgages and forgiving a portion of the debt"
Blantant pandering and a slap in the face for those who purchased conservatively or don't as yet own. This is disgusting.

Posted by: John | September 22, 2008 1:11 PM

dems are doing what they have to do, making sure the American public doesn't ever know, this crisis was created by the dems...a long time ago, under carter and clinton...and a dem congress...they want to nationalize our economy so that one day you will work for them...if you are not scared, you should be...
watch for a whole bunch of seniors to die from a flu or virus they will not have a vaccine for by mistake...they already tested the scenario...watch for it to happen...dems have to fix social security...

Posted by: Dwight | September 22, 2008 1:12 PM

Democratic Legislators: You'd better go ahead and anger those Republicans if you expect the people to put you back in office.
Don't back down. We the people are behind you 100%

Posted by: Stand Firm, Dems. | September 22, 2008 1:15 PM

Excelent to hear that congress is revising the proposal. We're in this mess, because the republicans let their corporate buddies do anything they wanted with no oversight or very little.

Posted by: Fer | September 22, 2008 1:18 PM

Well, I guess that mass lobotomy the Democrats gave themselves when they signed the Patriot Act is finally wearing off. Let's hope this time it's for real, as opposed to, say, when they caved on:

1. offshore oil drilling.
2. granting immunity to FISA.
3. failing to hold Bush Administration officials in contempt for ignoring Congressional subpoenas.
4. blocking the waste of 30,000 troops in Iraq that were needed to win in Afghanistan.
5. blocking funding for the Iraq War.
6. granting immunity to CIA torturers.
7. violating Habeas Corpus rights.
8. letting the Bush Administration build a gulag at Guantanamo Bay.
9. refusing to impeach and prosecute Dick Cheney and George Buch for authorizing the torture of POWs.

One can only hope. After all, at this point it is all we have left.

Posted by: Michael English | September 22, 2008 1:25 PM

I'm glad they are trying to revise this bill. The stipulations in this version seem more reasonable than those in Republican bill (i.e., none) - more oversight, no blank check, limits on compensation - that all seems a bit better. I'd like to learn more before we rush into this though.

I find the comment earlier by Paulson interesting - that they shouldn't try to limit compensation because that would make firms less likely to buy in to the program. My question is, if this drastic, giant bailout is needed to avert certain financial death, then why would that matter? Are these companies simply going to opt for destruction of the economy and all their investments just because there are compensation limits? So what's going on here - is it a drastic financial crisis or not, because if participation is suddenly optional to these companies because they don't like the terms, well, it doesn't sound that drastic. I'm not being saracastic BTW - I really am confused as to what is really going on here.

Posted by: Verdict still out | September 22, 2008 1:26 PM

dear god in heaven, if congress passes this bill the way that scumbag criminal bush wants it passed, i am going to go ballistic. no way in hell that we taxpayers should be on the hook for a trillion so that the bas tards that have taken home billions to bankrupt us can cling to their golden parachutes. there should be massive oversight, the taxpayers should own the companies we bailout, and there should be help for the victims of the subprime con game. my neighbor shouldn't lose his house while some wall street scumbag sails off in his 100 million dollar yacht.

Posted by: manny | September 22, 2008 1:31 PM

We must, MUST, have oversight. We must have the government receive shares for any taxpayer money--Otherwise taxpayers are donating to the short-sighted and amoral corporations that put us in this mess.

The plan must include the provision for taxpayers to get shares, which can then be sold to get our money back.

Posted by: thinking long term | September 22, 2008 1:31 PM

For the record: VERY opposed to any bailout.

Main point: Congress can't appoint to executive agencies. We've been down this road before and its a separation of powers issue. Unconstitutional. Why be stupid or reckless about the bailout plan you're attempting to craft.

This is the problem with 20 year olds working in Senate offices.

Posted by: ConLaw | September 22, 2008 1:38 PM

let it crash and burn; I would rather take a 2nd job and have my mother-in-law come live with us (a much dreaded thought) than to see any wall streeters make one dime of profit out of this mess.

NO BONUSES.
NO GOLDEN PARACHUTES

if the alternative is devestation of our financial system, so be it--that is preferable to shameless profiteering off of the backs of taxpayers

Posted by: pmc | September 22, 2008 1:39 PM

Let the Democrats(and the press) know they shouldn't back down to a (really)lame duck president, with cries that the sky is falling. They probably should be putting in more controls then they're suggesting.

Posted by: Brian | September 22, 2008 1:39 PM

Bush Urges Quick Passage of Bailout Package

http://www.washingtonpost.com/wp-dyn/content/article/2008/09/22/AR2008092200186.html?hpid=topnews

_________________________________

President Bush this morning warned lawmakers against trying to make too many changes to the proposed financial bailout legislation, saying the plan needs to be passed quickly and relatively intact to stem damage to global financial markets.

Weekend negotiations "made good headway" in crafting a bill to bolster a system weighed down by problem home mortgages, Bush said. But with proposals circulating to include provisions for homeowners in the bill or to use it to limit executive compensation, Bush cautioned that too many added provisions could impede approval of critically needed legislation.

"Obviously, there will be differences over some details, and we will have to work through them," Bush said, but "the whole world is watching to see if we can act quickly to shore up our markets and prevent damage to our capital markets, businesses, our housing sector, and retirement accounts.

"Failure to act would have broad consequences far beyond Wall Street. It would threaten small business owners and homeowners on Main Street."
_______________________

What utter H O R S E S H I T!

What did our fathers teach us to do when the used car salesman down the street sez "You gotta act fast, 'coz I got a few people coming this afternoon..."

You tell 'em to go ahead and sell the C r a p HEAP to somebody else!

We'll take all the time we wish to look this crap over, thank you very much Mr.Paulson, Mr.Bush... Should you find another buyer in the meantime, by all means sell! We'll understand!

-T

Posted by: Hajji | September 22, 2008 1:40 PM

So...is THIS what "Arbusto" does when he doesn't have "Bandar Bush", the BinLaden family or Daddy's CIA blackmail list to dig him out of yet ANOTHER grave he's dug for himself...and now big enough for ALL of us?

Posted by: Anonymous | September 22, 2008 1:49 PM

Considering that both the FED and TREASURY have failed in every intervention in this crisis to date, the congress has the absolute resposibility to make sure they are not given absolute power and that there are checks and balance in the system. Also, there has to be accountability. I say to take needed time, assemble finalcial experts, even the ones who have contrary view, listen to them before you come up with a bailout plan. The plan must preserve taxpayer interest. People who need bail out have lost the leverage.

Posted by: RK, Gaithersburg | September 22, 2008 2:15 PM

rewrite mortgages?

What the hell? Come on Congress, dont bailout people who agreed to crappy loans.

Posted by: john | September 22, 2008 2:59 PM

Dodd is circulating a draft bill that includes a provision for the Treasury taking an equity stake in companies which accept a bailout and extensive oversight of all purchases: http://bloomberg.com/apps/news?pid=20601087&sid=aHeROL9EmlRg&refer=home

Posted by: CarolBG | September 22, 2008 3:42 PM

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