Taylor Marsh – TaylorMarsh.com – News, Opinion and Weblog on Progressive Politics

BY TAYLOR MARSH

DRAFT –ahem– ‘Buy in’ BILL, as Pelosi called it. Servers slammed, try here.. PAUL KRUGMAN ** SECTION-BY-SECTION ANALYSIS **

Part of Speaker Pelosi’s comments just a few moments ago:

“…Last night it came down to three issues. How this money would be distributed. … Golden parachutes and compensation for CEOs. We had strong resistance from the Administration on that subject, as well as an assistance that we had that the American taxpayer is not going to pay this price. … We sent a message to Wall Street. The party is over. The era of golden parachutes for high flying Wall Street operators is over. No longer will the U.S. taxpayer bailout the recklessness of Wall Street. And that’s the news this legislation brings. Again, we want to insulate the American taxpayer, mainstreet, everyday Americans from the crisis on Wall Street. …” – Speaker Pelosi

This is about having something on the table before the markets open tonight. It’s not a done deal, but here are a
few details:

Among the provisions of the draft bill: * The $700 billion would be disbursed in stages, with $250 billion made available immediately for the Treasury’s use. * Curbs will be placed on the compensation of executives at companies that sell mortgage assets to Treasury. Among them, the bill would limit golden parachutes to executives at companies that participate; they will not be able to deduct the salary they pay to executives above $500,000. * An oversight board will be created. The board will include the Federal Reserve chairman, the Securities and Exchange Commission chairman, the Federal Home Finance Agency director and the Housing and Urban Development secretary. * Treasury is allowed the option to take ownership stakes in participating companies under certain circumstances. * Treasury may establish an insurance program – with risk-based premiums paid by the industry – to guarantee companies’ troubled assets, including mortgage-backed securities, purchased before March 18, 2008. Lawmakers’ goal is to shore up a deal before financial markets around the world open on Sunday evening.

There’s a pdf going around, which I’ve read, so hopefully there will be something
up live soon, which Pelosi said will be up on the Speaker’s website. In fact, it’s up now. (Keep trying, because servers are slammed.) When I have some comments from economic experts I’ll pass them on.

To add, Reid just said both McCain and Obama “have signed on” to the draft bill.

UPDATE: Paul Krugman is below. As I felt, he confirms, we’ll have to fix it next year:

My view is that (1) will be ineffective but also not a bad deal for taxpayers — firms that can afford to will dump their toxic waste at low prices, the way some already have on the private market, and taxpayers may end up making money in the end. Firms in big trouble will probably stay away from the auctions. The plan’s real traction, if any, is in (2), which is a backdoor way to provide troubled firms with equity — and the bill seems to say that taxpayers have to own this equity, although I wish it was clearer how much equity will be judged sufficient. Not a good plan. But sufficiently not-awful, I think, to be above the line; and hopefully the whole thing can be fixed next year.