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One version of the final bill and what it contains (and doesn’t contain)
Posted by: McQ on Sunday, September 28, 2008

This is a preview of the final bill that they've worded on this weekend. This is from a Republican source (email) showing a comparison of the previous two bills and the final bill as they wish to present it. Obviously there may be more:

IssuePaulson PlanFrank-DoddFinal Bill
$700B with no strings.700B – Delivered in 150B traunches that can be delayed by Congressional disapproval (and a Presidential signature)250B – Immediately available to the Secretary.

100B – Available upon report to Congress, certified by the President.

350B – Available ONLY upon Congressional action.
Insurance (House Republican Model)NONENONERequirement to establish mandatory insurance/guarantee program at no expense to the taxpayer. “Pay to play” for participating companies, based on risk. Outlays reduced by premiums collected.
Executive CompensationNot Specifically AddressedFar reaching executive compensation standards that would affect companies not even involved in this financial crisis. Additionally, the bill lowered the deduction on executive pay to $400,000 for ALL companies.Workable prohibitions on executive compensation to ensure bad actors are not rewarded. In a total takeover (like what happened with AIG), there will be no golden parachutes or severance pay. For equity participation, over $300M total ban for top 5 executives on golden parachutes and tax deduction limit on compensation above $500,000.
Oversight/TransparencyOnerous, unworkable and repetitive reporting and oversight requirements, hindering proper implementation of program. Establishment of bipartisan oversight commission, split evenly between minority and majority.
Practical reporting requirements to ensure proper reports to Congress and the public.

Creation of a Special Inspector General

Creates a financial stability oversight board

Implements strict conflict of interest and unjust enrichment rules

If after 5 years the government has a net loss of taxpayer funds as a consequence of the purchase program, the President will be required to submit a legislative proposal to recoup such funds from program beneficiaries.
“Say on Pay”
Union Take Over of Corporate Boards

So-called “say on pay” or “proxy access” which propose to mandate a nonbinding shareholder vote on proxy access and other corporate governance issues for all companies in which the Treasury Department buys a direct stake in certain assets. OUT
Affordable Housing Slush Fund (ACORN Fund)Included a giveaway that would force taxpayers to bankroll a slush fund for ACORN – an organization fraught with controversy for, among other scandals, its fraudulent voter registration activities on behalf of Democratic candidates.OUT
Bankruptcy “Cramdown” (aka, trial bar give-away)Included so-called “cramdown” provisions allowing bankruptcy judges to reduce mortgage principal under the guise of helping those at risk of foreclosure. If enacted into law, the provision would be a bonanza for trial lawyers and undercut the effectiveness of any economic recovery effort by making it even harder to value mortgage-backed securities.OUT
Mark-to-Market AccountingGAO study on the impacts of mark-to-market accounting standards and effects on the banking crisis. Restatement of existing authority to suspend mark-to-market.
Equity/WarrantsMandatory equity interest in all participating firms.Mandatory equity interests in total takeover scenario. Proportional equity interest based on percentage of assets sold if deemed appropriate Secretary.
Tax benefits for community banks
Ability for community banks to take capital losses on GSE assets against ordinary income.

Based on the comparision above is the propsed final bill -
More acceptable
Less accptable
Totally acceptable
Not at all acceptable free polls


UPDATE: Here's a link to the chart.
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Previous Comments to this Post 

I like that much of the pork has been stripped out, that there’s some form of oversight, and that there’s some protection by way of insurance. That said, I still shudder at the thought of the government doing this as I think it will set a terrible precedent, but at this point there’s probably too much momentum driving it to shut it down.
Written By: Ryan
Perhaps I’m misinterpreting it.

But couldn’t the insurance mechanism be perverted to be a way to subsidize bad mortgages. In other words, you bring the risk of a bad mortgage to parity with a good mortgages. When the bad mortgages go bad, they dip into the insurance. Good mortgages pay a lesser premium, but because they more numerous and almost never default, they use only a tiny fraction of what they are required to pay.
Written By: jpm100
URL: http://
I disagree in principle having a government bailout, but what is the alternative. The regulatory system has failed, those who saw this coming did not press the issue to the extent necessary a waken America, many politicians were effectively bought off by Fannie’s and Freddie’s campaign contributions with those same politicians still in leadership positions, and most Americans were content with a system that let them purchase a home with no down payment, closing costs rolled into the loan and many times interest only payments so they could “afford” more home.

After being forced into the sub-prime market, the mortgage industry was very creative and just about everyone bought into it. The 1977 Community Reinvestment Act started the ball rolling toward this financial meltdown when home ownership began to be thought of as a right by all too many politicians and citizens. So the march toward this crisis has been a slowly evolving; an almost unnoticed journey over the past 30 years.

The problem is to a large degree psychological. If nothing is done, in my opinion, we would see a resulting depression in more than one way. Not just the possible economic collapse, but societal aspects too. Can a society that has generally not had to accept sacrifice for two generations endure, without panic and the resulting anarchy, a continuing financial market meltdown and the resulting economic nightmare? I don’t think so; an opinion from a pre baby-boomer.
Written By: amr
"But couldn’t the insurance mechanism be perverted to be a way to subsidize bad mortgages."

Like the current arrangement? Isn’t that what got us into this mess? Sure, get in touch with AIG. They will insure it.
Written By: timactual
URL: http://
I wish I knew more about the Great Depression; it was my grandparents’ generation. But I concur with AMR that my generation will sell their souls before they’ll accept any decrease in lifestyle. There are still a few of us who were raised to view our current affluence with gratitude and wonder, but most of my generation will gladly give up their birthright of liberty for a mess of pottage. I simply cannot imagine what would happen to them if they were forced to cut back to a Depression-era or worse, a subsistence lifestyle. People think I’m weird because I know how to make my own cheese and could make clothes out of sheep and I don’t panic when there’s no cell phone service. They have no idea how people would survive if things got bad.
Written By: Wacky Hermit

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