Congressional negotiators agreed in principle last night to a $700 billion bailout package. The bill is currently being transformed into draft legislation that can be voted on
The bailout will be expanded to pension plans, local governments, and community banks. Here are the details as reported by Reuters:
- The $700 billion in buying power would be doled out by Congress in stages. After the first $250 billion is authorized, the President could request another $100 billion. The final $350 billion could be cleared by a further act of Congress.
- Washington will take a stake in companies helped through the program so that taxpayers can share in the profits if those companies get back on their feet.
- A new congressional panel would have oversight power and the Treasury secretary would report regularly to lawmakers in two elements of a multi-level oversight apparatus.
- Compensation limits would be set for the chiefs of participating firms to prevent excessive pay and “golden parachutes” for those who might tap government aid and then quit.
- The federal government may stall foreclosure proceedings on home loans purchased under the plan.
- Alongside the plan to buy securities outright, the Treasury Department will conceive an alternative insurance program that would underwrite troubled loans and would be paid for by participating companies.
- If the government has taken losses five years into the program, the Treasury Department will draft a plan to tax the companies that took part to recoup taxpayer losses.
The Wall Street Journal reports the marathon negotiating session was fueled by pizza and “a platter from sandwich shop Cosi.”
Both parties will now release their Whips into the horde of election-weary members. Expect an exciting (yes, exciting) vote late tonight before the Asian markets open.