Neil's Spotlight Summary of Economic Recovery (Bail-Out) Plans
September 26, 2008
Here's a summary of at least six plans, or options, that may be taken to address the crisis on Wall Street.
Bush Administration Plan
Congress grants $700B cash to the Secretary of Treasury to buy non performing securities;
Government contracting rules are suspended.
Democratic Congressional Leadership Plan
Government Accounting Office oversight;
Disclosure every transaction within 48 hours;
Regular reports to Congress;
Judicial review of the Secretary of the Treasury’s actions
Establishing contract procedures that minimize conflicts of interest;
FDIC will be the asset manager for loans;
Treasury must provide assistance to homeowners when acquiring mortgages and mortgage backed securities;
Only U.S. financial intuitions can participate, however, Treasury can assist foreign Central Banks;
Limits on executive compensation, shareholders vote on executive compensation;
Emergency stabilization fund restoration for money market mutual funds;
Bankruptcy provision that allows homeowners to change the terms of the mortgage agreement in bankruptcy court.
Republican Leadership Plan
No public dollars — mortgage insurance should pay for bad mortgages;
Remove regulatory requirements and lower taxes on all business sectors;
Stop dividend payments to stockholders of participating investment firms;
Require any participating firm to disclose the value of their mortgage assets, value of any private bids for such assets, and the last audit report performed;
SEC audits all failed companies to insure that their financial standings are accurately portrayed;
No taxpayer funding for Wall Street Executives in any form;
Create a panel composed of representatives of the Treasury, SEC, Federal Reserve to make recommendations to Congress by January 1, 2009.
Transaction Tax Plan
Transaction tax would be imposed on the sale and purchase of stock and transactions such as credit default swaps, options, and futures. A quarter percent (0.25%) tax on financial transactions could raise approximately $150 billion a year;
The U.S. had a similar tax from 1914 to 1966, a 0.2% tax on all sales or transfers of stock. In 1932, Congress more than doubled that tax to help to raise funds to help recover from the Great Depression.
Sherman Plan
The Treasury Secretary cannot enter into any contract until it is approved by a bipartisan 3 member board; one appointed by the Speaker of the House, one by the Senate Majority Leader and one by the President;
Phased Authorization of the funds;
US Investors ONLY;
Obligation to invest in the United States, and the proceeds of the sale in the U.S. for no less than five years;
Tough standards on executive compensation, and high taxes against executive compensation;
Homeowners are still protected by state and local laws
Treasury will report to Congress every two weeks;
Treasury shall be bound by all laws designated to include minority and women owned businesses and all applicable government contracting laws; as well as “Buy America” provisions;
All actions by the Secretary shall be reviewable by any agency or court of law;
Treasury shall not pay more for any asset than that asset’s fair market value.
Do Nothing
Vote against any measure that involves this issue.
