Comparison of original Paulson bailout to compromise proposal
By: Mark Tapscott
Editorial Page Editor
09/28/08 10:15 AM EDT
House Republican Whip Roy Blunt's office provides this side-by-side comparison of Treasury Secretary Henry Paulson's original Wall Street bailout proposal with the final compromise agreed to over the weekend by congressional and Treasury negotiators:
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Side-by-Side Comparison of Rescue Legislation
|
Issue |
Paulson Plan |
Frank-Dodd |
Final Bill |
|
$ |
700B |
700B – Delivered in 150B traunches that can be delayed by Congressional disapproval (and a Presidential signature) |
250B – Immediately available to the Secretary. 100B – Available upon report to Congress. 350B – Available ONLY upon Congressional action.
|
|
Insurance (HouseRepublican Mode) |
|
|
Requirement to establish mandatory insurance/guarantee program at no expense to the taxpayer. “Pay to play” for participating companies, based on risk.
|
|
Executive Compensation |
|
Far reaching executive compensation standards that would affect companies not even involved in this financial crisis. Additionally, the bill lowered the deduction on executive pay to $400,000 for ALL companies. |
Workable prohibitions on executive compensation to ensure bad actors are not rewarded. In a total takeover (like what happened with AIG), there will be no golden parachutes or severance pay. For equity participation, over $300M total ban for top 5 executives on golden parachutes and tax deduction limit on compensation above $500,000.
|
|
Oversight/Transparency |
|
Onerous, unworkable and repetitive reporting and oversight requirements, hindering proper implementation of program. |
Establishment of bipartisan oversight commission, split evenly between minority and majority. Practical reporting requirements to ensure proper reports to Congress and the public.
If after 5 years the government has a net loss of taxpayer funds as a consequence of the purchase program, the President will be required to submit a legislative proposal to recoup such funds from program beneficiaries.
|
|
“Say on Pay” Union Take Over of Corporate Boards |
|
So-called “say on pay” or “proxy access” which propose to mandate a nonbinding shareholder vote on proxy access and other corporate governance issues for all companies in which the Treasury Department buys a direct stake in certain assets.
|
OUT |
|
Affordable Housing Slush Fund (ACORN Fund) |
|
Included a giveaway that would force taxpayers to bankroll a slush fund for ACORN – an organization fraught with controversy for, among other scandals, its fraudulent voter registration activities on behalf of Democratic candidates.
|
OUT |
|
Bankruptcy “Cramdown” (aka, trial bar give-away) |
|
Included so-called “cramdown” provisions allowing bankruptcy judges to reduce mortgage principal under the guise of helping those at risk of foreclosure. If enacted into law, the provision would be a bonanza for trial lawyers and undercut the effectiveness of any economic recovery effort by making it even harder to value mortgage-backed securities.
|
OUT |
Mark-to-Market Accounting |
|
|
GAO study on the impacts of mark-to-market accounting standards and effects on the banking crisis. Restatement of existing authority to suspend mark-to-market.
|
|
Equity/Warrants |
|
Mandatory equity interest in all participating firms. |
Mandatory equity interests in total takeover scenario. Proportional equity interest based on percentage of assets sold if deemed appropriate Secretary. |
|
Tax benefits for community banks |
|
|
Ability for community banks to take capital losses on GSE assets against ordinary income. |
