The approval of the bailout plan came 13 days after the administration put forward a three-page proposal that would have given the Treasury secretary unfettered authority to run the $700 billion effort, in what Ms. Pelosi called “czar-like powers.”
Tense negotiations over eight days – including an extraordinary and contentious meeting at the White House between Mr. Bush, top lawmakers and the two presidential candidates, Senator John McCain and Mr. Obama – produced a compromise that all sides said they could support if unenthusiastically.
The final agreement called for the $700 billion to be disbursed in parts: $250 billion at first, to get the program started, followed by $100 billion at the discretion of Mr. Bush and the remaining $350 billion upon request of the Treasury with Congress empowered to block the last installment by acting within 15 days.
It is impossible to predict the final cost of the bailout but officials insist it will be far less than $700 billion. Because the Treasury will purchase and then resell assets, potentially at a higher price, there is a chance the program will break even or perhaps turn a profit.
The deal provides for tight oversight by two boards, including an independent Congressional panel. And requires the government to use its status as a large-scale owner of distressed, mortgage-backed securities to take more aggressive steps to prevent foreclosures.
The bill also seeks to limit the pay of executives of some companies that sell bad debt to the government, including restrictions on so-called “golden parachute” retirement plans.
It also provides several taxpayer protections, including a mechanism for the government to take an equity stake, in the form of stock warrants, in some of the firms that seek government help, which will give taxpayers a chance to make money should the companies profit in the months and years ahead.
And, if the rescue plan has lost money after five years, the bill requires the president to submit a plan to Congress for recouping the losses from the financial industry, perhaps through fees or a tax on securities transactions. (Truthout/ Posted by Bulatlat)
Carl Hulse and Robert Pear contributed reporting.