It’s out. Read it here. It’s early enough that we don’t have a full handle on everything in it yet. What is know is the following:
- Insurance covering any assets purchased by the government
- Oversight by the government via the Financial Stability Oversight Board (members of which are not to be additionally compensated)
- Money will be dispersed in stages, starting with a $250 billion disbursement
- The Secretary of the Treasury gets to sell off these assets when and however he wants…
- Provisions to help homeowners (including owners of rental properties) keep or refinance their mortgages (Apparently the HOPE for Homeowners program is highlighted)
- Wording to prevent golden parachutes, but it looks like there are likely ways around this. So this seems to be working just to make certain partied happy as opposed to a definite prohibition. (Warning! This looks like a red herring!)
- All information related to assets purchased by the government will be made public within 2 days of the transaction
- A report on the current state of regulatory reform has to be submitted by January 20, 2009…. This is a report to congress, however, and will not necessarily become public.
- It appears that in 5 years, upon the expiration of this bill, if there’s a shortfall, that shortfall can be recouped from the companies benefiting from the act.
- Financial experts and consultants can be brought in for advice (presumably in paid positions)
- The treasury can, optionally, take an ownership in any company participating in this bailout.
This is a lot here. The plan has expanded a tad from a mere 3 page proposal to a 106 page draft. I’m still skeptical of this entire process, I’m of the opinion that the market will right itself given time, but as far as a bill goes, it doesn’t seem too bad … Though I am not a lawyer and I don’t completely understand everything in the draft.
One thing I would like to point out is that this bill gives an insane amount of power to the Secretary of the Treasury. At the moment, that is Henry Paulson, the former CEO of Goldman Sachs. I don’t know much about this guy, but regardless, this feels like an awful lot of power for someone with such ties to the financial community. I could, of course, be wrong, and this may be the perfect person to handle this. But there are a number of provisions within the draft to prevent the limitation of the power of the Secretary… I’m not sure that’s such a wise decision.
Regardless, there it is. I’m sure there will be a lot of talk over the next few hours, possibly days. And I’ll bet that the wording will change, probably significantly, prior to it being accepted… And, unfortunately, as much as I’d like to see it fall flat and not get passed, I can almost guarantee that it will pass.