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The financial amateurs in Congress have given us the 110 page text of their bailout plan which they will probably vote on today. It’s pretty much like the 102 page draft I wrote about on Saturday. They added the option to insure troubled assets in addition to the option to buy such assets. They also settled on the Graduated Authority to Purchase version rather than a straight-up $700B gift. I’m not sure if this is new, but there is also an option to remove the mark-to-market rules in the latest version.
The financial professionals such as Ross Perot have outlined a much better plan at perotcharts.com. Their plan in the immediate term calls for:
- Modification or removal of mark-to-market
- A 120 moratorium on foreclosures and dividend payments by banks
- Higher national standards for capital bases at banks with the Treasury able to buy equity in those banks who cannot raise equity to meet the standard
- Raising the FDIC guarantee from $100,000 to $250,000
- Using any profits from equity that the government does buy to strengthen Social Security
- An independent oversight board for the plan
- Criminal investigations into the causes of the crisis
Later they would fix the Glass-Stegall Act, amend bankruptcy regulations, and give HUD/Fannie Mae/Freddie Mac the authority to work with individual homeowners facing foreclosure.
It’s too bad our amateur decision makers are so busy listening to the vested-interests rather than the independent professionals.
