The new plan puts caps on exective pay and golden parachutes, it also allows foreclosures to proceed (and this is a must – some people have walked away from their homes,) and it stops money from going to Acorn and other Democrat activist groups that led us to this crisis. So on the surface it looks good.
Over the next thirty years many of these mortgages will be paid off, producing potential profit, and those that aren’t are still backed by houses and property in the US, still one of the best countries in the world to live in. The bill will be posted for 24 hours before the vote, and you can bet that bloggers will be going over it with a fine tooth comb. I intend to read it, but won’t plan on commenting unless there is something egregiously wrong with it (beyond just the fact that we have to do this.)
Right now on paper these bundles of mortgages appear to have little value, but over time they will regain their worth. The similar period we saw in Japan took about ten years, if we build the energy sources we need and build our economy it could happen quicker than that here.
Much more on the deal at Washington Post:
- 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 participating in the bailout would be required to grant the government warrants to obtain nonvoting shares of stock, so taxpayers can benefit if the companies return to profitability.
- 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.
I like it that they are metering the money with checkpoints, I like it that there are these and other limits. What I don’t like is that there will be fees on the financial services industry as part of the agreement if they don’t turn this around in five years. Without seeing the details of how this all knits together, it’s really impossible to comment more on the plan. I await the posting of it.
Update: Also now note that President Clinton also pins this blowup directly on House and Senate Democrats.
Update: More at Big Lizards
UPDATE: The bill is posted, and it looks better than previously stated. The House Republicans have a fact page up on it. I got tied up at work today and have not yet had time to read it, but I will on the morrow. If anything pokes me in the eye I will be writing about it. Otherwise, for now I support this move.
Here’s Boehner thanking McCain for his assistance on the bill.