The following is a transcript of the $700 billion plus deal that passed its first reading Wednesday October 1.
It outlines the basic principles and key points of the bailout.
It is important not only to the American economy but to the world and clearly the New Zealand economy as well.
I have my doubts as to its effectiveness because it doesnt seem large enough.
Congress Announces Bipartisan Agreement On Emergency Economic Stabilization Plan To Restore Stability In The Financial Markets, While Protecting Taxpayers On Main Street
Congressional leaders announced an agreement on a bipartisan compromise to address the Nation's financial crisis. The Administration worked closely with Congressional leaders from both sides of the aisle to reach an agreement quickly on legislation approving the government's purchase of difficult-to-sell assets, such as troubled mortgage-backed securities, from banks and other financial institutions.This agreement is a decisive step that will address underlying problems in our financial system. It will help take pressure off the balance sheets of banks and other financial institutions, and it will allow them to resume lending and get our financial system moving again. Further stress on our financial markets would likely lead to massive job losses, devastated retirement accounts, further erosion of housing values, and reduced availability of loans for new homes, cars, and college tuitions. This new proposal will entail risk, but the risk of not acting would have been far greater.
The President and his Administration agree that this is the right course to take. The agreed-upon legislation is robust and will allow us to get to the source of the problem – the troubled mortgage-related assets. This agreement is big enough to be effective, which will help ensure that credit is available for the benefit of American families and businesses.
President Bush appreciates the work of Congress and his Administration to come to an agreement quickly and effectively. The spirit of cooperation between Democrats and Republicans in Congress has made this proposal stronger. This bipartisan proposal provides the flexibility we need to stabilize our financial systems by giving the Treasury Secretary the authority to purchase and provide guarantees for troubled assets.
The Emergency Economic Stabilization Plan Includes Important Provisions Providing Strong Oversight To Protect American Taxpayers And Strengthen Our Financial System
This legislation places limits on executive compensation. When Treasury buys assets directly, the financial institution must observe standards limiting incentives and prohibiting golden parachutes. When the Treasury Department buys assets at auction, an institution that sells more than $300 million in assets is subject to penalties for golden parachute payments triggered by events other than retirement and compensation above $500,000 will not be tax-deductible.
The Treasury Department will receive non-voting warrants from participating financial institutions, in order to cover losses and administrative costs while allowing taxpayers to benefit from equity appreciation.
Under this bipartisan agreement, the Treasury Secretary must purchase troubled assets in stages. Initially, the Treasury Secretary will have the ability to immediately purchase up to $250 billion. In order to access the next $100 billion, the President must certify the need for the authority and report to Congress. For the final $350 billion; the President must request the authority through a written report to Congress. The Treasury Secretary will then have the authority unless Congress passes a joint resolution of disapproval within 15 days. The President will have the power to veto the resolution.
It is expected that much, if not all, of the tax dollars invested by the Federal government into these troubled financial institutions will be paid back over time. Under the purchase program, the government would sell the acquired assets, with the proceeds going back to the Treasury, to offset much, if not all, of the initial cost, and under the program to guarantee troubled assets, the Treasury Department would charge risk-based premiums to cover any anticipated claims.
President Bush Looks Forward To Working With Congress To Stabilize Our Financial System In The Long Term
For many years the President and his Administration have not only warned of the systemic consequences of financial turmoil at a housing government-sponsored enterprise (GSE) but also put forward thoughtful plans to reduce the risk that either Fannie Mae or Freddie Mac would encounter such difficulties. President Bush will continue working with Congress on measures to bring greater long-term transparency and reliability to the financial system. This includes those measures laid out in the regulatory blueprint submitted earlier this year by Secretary Paulson.
Many of the regulations governing America's markets were written in a different era, patched together over the last 75 years in response to market conditions that may no longer exist. It is vital that we update them to meet the realities of today's global financial system.
The Blueprint recommends creating a new objectives-based approach to regulation that includes a market stability regulator, a prudential regulator, and a business conduct regulator that focuses on consumer protection.
I have trawled my way through the Internet so you don't have to, to find the quirkiest little videos so you can watch them inn the comfort of your easy chair.
This one by the folks at the 42 Below Vodka company takes a poke at Helen Clark (from a long distance away metaphorically speaking) on how she might have been elected Prime Minister.
