Politics

The Emergency Economic Stabilization Act of 2008

By Office of the Speaker

Significant bipartisan work has built consensus around dramatic improvements to the original Bush-Paulson plan to stabilize American financial markets?including requiring a plan to ensure the taxpayer is repaid in full.

Read the Emergency Economic Stabilization Act of 2008 (SUBJECT TO FURTHER TECHNICAL REVISIONS) .pdf >>

CRITICAL IMPROVEMENTS TO THE RESCUE PLAN
Democrats have insisted from day one on substantial changes to make the Bush-Paulson plan acceptable?protecting American taxpayers and Main Street?and these elements are included in the draft legislation under consideration.

PROTECTION FOR TAXPAYERS, REQUIRING A PLAN TO BE REPAID IN FULL

Requiring Congressional review after the first $350 billion is disbursed

Gives taxpayers a share of the profits of participating companies, or puts taxpayers first in line to recover assets if a company fails

Requires a President five years from now to submit a plan to ensure taxpayers are repaid in full, with Wall Street making up any difference

Allows the government to also purchase troubled assets from pension plans, local governments, and small banks that serve low- and middle-income families

LIMITS ON EXCESSIVE COMPENSATION FOR CEOs AND EXECUTIVES
For companies publicly auctioning over $300 million:

No multi-million dollar golden parachutes for top 5 executives after auction

No tax deduction for executive compensation over $500,000

Penalizes golden parachutes for CEOs who are fired or have run the company into the ground

For companies from which the government makes direct purchases:

No multi-million dollar golden parachutes

Limits CEO compensation that encourages unnecessary risk-taking

Recovers bonuses paid to executives who promise gains that later turn out to be false or inaccurate

STRONG INDEPENDENT OVERSIGHT AND TRANSPARENCY

Four separate independent oversight entities or processes to protect the taxpayer

A strong oversight board appointed by bipartisan leaders of Congress

GAO oversight and audits at Treasury to ensure strong controls; to prevent waste, fraud, and abuse

An independent Inspector General to monitor the Treasury Secretary?s decisions

Transparency?requiring posting of transactions online

Meaningful judicial review of the Treasury Secretary?s actions

HELP TO PREVENT HOME FORECLOSURES CRIPPLING THE AMERICAN ECONOMY

The government can work with loan servicers to change the terms of mortgages (reduce principal or interest rate, lengthen time to pay back the mortgage) to reduce the 2 million projected foreclosures in the next year

Extends provision (enacted earlier in this Congress) to stop tax liability on mortgage foreclosures

Helps save small businesses that need credit by aiding small community banks hurt by the mortgage crisis?allowing these banks to deduct losses from investments in Fannie Mae and Freddie Mac stocks

Full post as published by The Gavel on September 28, 2008 (boomark / email).