"The Official Portrait of Miss InDiana"

"The Official Portrait of Miss InDiana"
aka "Miss Victory"

Sunday, September 21, 2008

The U.S. Mortgage Bailout Bill ...they came up with all this in just two days

Text of Draft Proposal for Bailout Plan



Section 1. Short Title.

This Act may be cited as ____________________.

Sec. 2. Purchases of Mortgage-Related Assets.

(a) Authority to Purchase.--The Secretary is authorized to purchase, and to make and fund commitments to purchase, on such terms and conditions as determined by the Secretary, mortgage-related assets from any financial institution having its headquarters in the United States.

(b) Necessary Actions.--The Secretary is authorized to take such actions as the Secretary deems necessary to carry out the authorities in this Act, including, without limitation:

(1) appointing such employees as may be required to carry out the authorities in this Act and defining their duties;

(2) entering into contracts, including contracts for services authorized by section 3109 of title 5, United States Code, without regard to any other provision of law regarding public contracts;

(3) designating financial institutions as financial agents of the Government, and they shall perform all such reasonable duties related to this Act as financial agents of the Government as may be required of them;

(4) establishing vehicles that are authorized, subject to supervision by the Secretary, to purchase mortgage-related assets and issue obligations; and

(5) issuing such regulations and other guidance as may be necessary or appropriate to define terms or carry out the authorities of this Act.

Sec. 3. Considerations.

In exercising the authorities granted in this Act, the Secretary shall take into consideration means for--

(1) providing stability or preventing disruption to the financial markets or banking system; and

(2) protecting the taxpayer.

Sec. 4. Reports to Congress.

Within three months of the first exercise of the authority granted in section 2(a), and semiannually thereafter, the Secretary shall report to the Committees on the Budget, Financial Services, and Ways and Means of the House of Representatives and the Committees on the Budget, Finance, and Banking, Housing, and Urban Affairs of the Senate with respect to the authorities exercised under this Act and the considerations required by section 3.

Sec. 5. Rights; Management; Sale of Mortgage-Related Assets.

(a) Exercise of Rights.--The Secretary may, at any time, exercise any rights received in connection with mortgage-related assets purchased under this Act.

(b) Management of Mortgage-Related Assets.--The Secretary shall have authority to manage mortgage-related assets purchased under this Act, including revenues and portfolio risks therefrom.

(c) Sale of Mortgage-Related Assets.--The Secretary may, at any time, upon terms and conditions and at prices determined by the Secretary, sell, or enter into securities loans, repurchase transactions or other financial transactions in regard to, any mortgage-related asset purchased under this Act.

(d) Application of Sunset to Mortgage-Related Assets.--The authority of the Secretary to hold any mortgage-related asset purchased under this Act before the termination date in section 9, or to purchase or fund the purchase of a mortgage-related asset under a commitment entered into before the termination date in section 9, is not subject to the provisions of section 9.

Sec. 6. Maximum Amount of Authorized Purchases.

The Secretary’s authority to purchase mortgage-related assets under this Act shall be limited to $700,000,000,000 outstanding at any one time

Sec. 7. Funding.

For the purpose of the authorities granted in this Act, and for the costs of administering those authorities, the Secretary may use the proceeds of the sale of any securities issued under chapter 31 of title 31, United States Code, and the purposes for which securities may be issued under chapter 31 of title 31, United States Code, are extended to include actions authorized by this Act, including the payment of administrative expenses. Any funds expended for actions authorized by this Act, including the payment of administrative expenses, shall be deemed appropriated at the time of such expenditure.

Sec. 8. Review.

Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.

Sec. 9. Termination of Authority.

The authorities under this Act, with the exception of authorities granted in sections 2(b)(5), 5 and 7, shall terminate two years from the date of enactment of this Act.

Sec. 10. Increase in Statutory Limit on the Public Debt.

Subsection (b) of section 3101 of title 31, United States Code, is amended by striking out the dollar limitation contained in such subsection and inserting in lieu thereof $11,315,000,000,000.

Sec. 11. Credit Reform.

The costs of purchases of mortgage-related assets made under section 2(a) of this Act shall be determined as provided under the Federal Credit Reform Act of 1990, as applicable.

Sec. 12. Definitions.

For purposes of this section, the following definitions shall apply:

(1) Mortgage-Related Assets.--The term “mortgage-related assets” means residential or commercial mortgages and any securities, obligations, or other instruments that are based on or related to such mortgages, that in each case was originated or issued on or before September 17, 2008.

(2) Secretary.--The term “Secretary” means the Secretary of the Treasury.

(3) United States.--The term “United States” means the States, territories, and possessions of the United States and the District of Columbia.

1 comment:

Anonymous said...

Tensions mount over bail-out

By Krishna Guha, Harvey Morris, Andrew Ward and Daniel Dombey in Washington and George Parker in Manchester

Published: September 21 2008 19:13 | Last updated: September 22 2008 03:47

A high stakes game of political poker was under way in Washington on Sunday as Congress prepared to vote this week on a plan to create a $700bn fund to buy toxic assets from banks and thereby ease the credit squeeze.

Democratic legislators pressed for a housing component to be added to the bill and demanded assurances that President George W. Bush would not veto a subsequent second stimulus bill.
Full coverage: Global financial crisis - Sep-16
Gillian Tett: Calm must prevail - Sep-21
The shadow banking system is unravelling - Sep-21
Lex: Hanks a lot - Sep-21
Banking on success of Paulson’s big idea - Sep-21
Wolfgang M√ľnchau: Defaults will test a fair-weather construction - Sep-21

The Bush administration was trying to hold out for a “clean” bill that dealt only with the financial rescue, while Republicans in Congress said they would fight a hasty compromise that included many add-ons.

At 5pm Nancy Pelosi, the speaker of the House of Representatives, issued a statement that said: “Congress will respond to the financial markets crisis by taking action this week in a bipartisan manner.” But it added “we will not simply hand over a $700bn blank cheque to Wall Street.” Democrats would insist on “independent oversight, protections for homeowners and constraints on excessive executive compensation.”

Some Republicans also favour restrictions on executive pay for banks taking part in the scheme. The Treasury fears this could undermine banks’ willingness to take part.

The political negotiations came as Hank Paulson, US Treasury secretary, called on other nations to follow the US lead in tackling the problems in the global financial system. During a tour of US television networks, Mr Paulson said: “I will be pressing my colleagues around the world to design similar programmes for their banks.” The US is not asking other governments to join its proposed fund.

The Treasury secretary said the US scheme should be open to all banks with “significant operations” in the US – including foreign-owned banks, even though this is likely to be politically controversial. “The American people don’t care who owns the financial institution. If the financial institution in this country has problems it has the same impact whether it is US or foreign-owned,” he added.

A senior US official told the Financial Times the banks could be paid partly in cash and partly with a capital note giving them some exposure to future losses and possibly gains on the assets.

Some industry groups are lobbying for a clause that would allow banks selling assets to the fund to account for any losses realised over a number of years.

The passage of the legislation is seen as essential to avoid a renewed tailspin in world financial markets.

“I don’t like the fact that we have to do this. I hate the fact that we have to do this,” Mr Paulson said on Sunday. “But it is better than the alternative.”

Top legislators and administration officials stressed their shared determination to get the legislation passed. But behind the bipartisan statements there was anger in both camps at what each saw as efforts by the other to use financial danger to bounce them into policy decisions.

The White House warned the Democrats against overplaying their hand. “This is not the time to be testing what are very unsettled and fragile markets,” said Tony Fratto, White House spokesman.

“It’s important that everyone understands the seriousness of the situation we’re in and that we send a very strong signal to the market that this plan will go forward and go forward quickly.”

Meanwhile, the global crackdown on short-selling continued, with the Securities and Exchange Commission requiring large asset managers to disclose short sales starting on Monday, while Australian regulators extended their ban on naked short-selling to cover all short-selling.

In what amounted to a vote of confidence for the US treasury secretary, Barack Obama, the Democratic presidential nominee, said he would ask Mr Paulson to play a role in any transition towards a Democratic administration.

“I would certainly want to make sure that Paulson was involved in the transition,” Mr Obama told CNBC television, in comments that highlighted his own efforts to project an image of continuity and stability in dealing with the financial turmoil. “That doesn’t necessarily mean that he’d end up being the Secretary of the Treasury, but I think it’s important for us to make sure that those who are currently in charge when it comes to the financial crisis and defence and intelligence... are deeply involved in the transition process.”

John McCain, the Republican nominee, sounded a similar bipartisan note, suggesting that he would appoint Andrew Cuomo - a Democrat- as head of the Securities and Exchange Commission. Last week, Mr McCain said he would dismiss the SEC’s current Chairman, Christopher Cox, a former Republican Congressman.

”I’ve admired Andrew Cuomo,” Mr McCain told CBS televison’s ”Sixty Minutes” programme. ”I think he is somebody who could restore some credibility, lend some bipartisanship to this effort.”

Mr Obama told the programme he considered the US to be in recession and that Mr Paulson and Ben Bernanke, the Chairman of the Federal Reserve, had no alternative but to put together the bailout.

”There’s no doubt that we’re going to see, when the numbers come out, that we are officially in recession,” he said. ”I think by the time Secretary Paulson and Federal Reserve Chairman Bernanke were looking at these problems, they had no good options left.”