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The Bailout Plan; It actually isn't too bad
Tweet Topic Started: Sep 28 2008, 08:56 AM (43 Views)
Mr Gray Sep 28 2008, 08:56 AM Post #1
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http://www.foxnews.com/story/0,2933,429321,00.html

In general, I am against the bailout, however knowing that they felt they had to do something, I think the arrangement they have come to is much much better than the blank check that Bush originally wanted. Here are a few highlights for me.

At the insistence of House Republicans, some of the program's $700 billion would be devoted to a program that would encourage holders of distressed mortgage-backed securities to keep them and buy government insurance to cover defaults Many of these financial institutions have converted to standard banks so that they can now collect capital through savings accounts, therefore many of them might take this deal to avoid the additional government oversight, saving the taxpayer money.

The legislation would place "reasonable" limits on severance packages for executives of companies that benefit from the rescue plan, said a senior administration official who was authorized to speak only on background. It would affect fired executives of financial firms, and executives of firms that go bankrupt. Some of the provisions would be retroactive and some prospective, the official said Not sure whay they consider "reasonable" but it looks like they decided against restricting executive pay, and are just restricting their golden parachutes. I personally would eliminate their severence alltogether for bankrupt firms, but oh well.

The plan calls for the Treasury Department to buy deeply distressed mortgage-backed securities and other bad debts held by banks and other investors. The money should help troubled lenders make new loans and keep credit lines open. The government would later try to sell the discounted loan packages at the best possible price.
The proposed legislation also calls for the financial sector to help make up the difference if the government does not recoup its investment in five years, the official said, but details were unclear.
Also, the government would receive stock warrants in return for the bailout relief, giving taxpayers a chance to share in financial companies' future profits.
Not sure who among "the financial sector" is responsible for making up the difference, but it is a good idea in principle. I just don't want to see strong companies like JP Morgan....etc, have to get taxed into oblivian to help make up for the government's shortcomings in this deal. I am curious to hear more about this portion.

To help struggling homeowners, the plan would require the government to try renegotiating the bad mortgages it acquires with the aim of lowering borrowers' monthly payments so they can keep their homes. I am OK with negotiating bad mortgages, just so long as the lenders aren't forced to make changes to the contract against their will (as Biden has suggested he would do), which doesn't appear to be the case.

Money for the rescue plan would be phased in, he said. The first $350 billion would be available as soon as the president requested it. Congress could try to block later amounts if it believed the program was not working. The president could veto such a move, however, requiring extra large margins in the House and Senate to override A built in stop-gap in case it doesn't go as planned...not bad.

What do you guys think?
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The body knows what fighters don't: how to protect itself. A neck can only twist so far. Twist it just a hair more and the body says, "Hey, I'll take it from here because you obviously don't know what you're doing... Lie down now, rest, and we'll talk about this when you regain your senses." It's called the knockout mechanism.
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brumdog44 Sep 28 2008, 05:07 PM Post #2
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From what I understand, the numbers on the amounts ($250 billion immediate, $100 billion without congress approval and the remainder would need congressional approval) were in the original bailout plan presented to congress. The hoops that would have to be jumped through may have changed, but I am sure that was the original numbers.
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