Bleh. Here's my summary of the 110 page bailout bill.

Okay, kids, this may seem long, but it’s about 107 pages less than the real bill.

The bill is at: (PDF). There have been some wild-ass numbers thrown around in other threads, so I’m going to use scientific notation for the large numbers.

The Secretary is given unlimited power to define anything he wants as a “troubled asset,” including mortgages & Mortgage Backed Securities, along with any other asset related to anything else in the universe, and can then buy those assets to prop up whichever company he’s trying to save. However, the US citizens get an equity stake for these purchases. (See “Okay, teeth” below).

**Wishes for ponies:**I always like “you shall wish for a pony” requirements in contracts, because they very explicitly require that we wish for a pony. We don’t need to provide a pony or, in fact, do anything more than type a sentence that says, “We wish for a pony,” to satisfy such requirements.

Such requirements are in the bailout bill: the Secretary shall:[ul][li]Think about HUD requirements[]Think about fairness in lending[]Produce a report that contains suggestions for creating a list of reccommendations (also wishes for ponies) that Congress might make to him regarding his activities[]Shall attempt to coordinate with various groups in an attempt to determine that tenants of any particular mortgage owned by the citizens are actually tenants. Doesn’t even have to coordinate; just has to attempt to coordinate. Just type, “I hereby attempt to coordinate,” and you’re done.[]Make reports available to Congress. Congress has one authority: to report suspected fraud to the AG. Note that fraud has a very high threshold, and as many politicians and business leaders have shown in the past decade, there’s nothing fraudulent about making very, very bad decisions.[]Seek to maximize potential return for the taxpayers. Just have to seek; no need to find.[]Encourage loan modifications. Just say, “Please think about modifying this loan, thanks.”[/ul][/li]
There is an oversight board, and it consists of the Chairman of the Board of Governors of the Fed, the Secretary; the Director of the Federal Home Finance Agency; the Chairman of the SEC and the Secretary of HUD. These are the people who have proven incompetent up to this point, but presumably they’re about to become competent. The oversight board also has only one actual power: to report suspected fraud to the AG, as long as they do it within two weeks of a given crime.

No reporting of any kind is required until seven days after each multiple of $50B ($5e10) has been spent. Any injunction against an action by the Secretary is granted an automatic stay of three days, but I honestly don’t understand the language in that section. The Secretary has the authority to do anything he or she wants in connection to anything he or she purchases, and can obtain money from the Treasury up to the current dollar limits of the float (see below), commit the government to whatever contractual relationships he or she wants with whatever company or individual he or she wants.

They go into great detail about wishes for ponies that Secretary might have regarding any particular mortgage that he purchases for the U.S. citizens, but ultimately, he has no requirement to do anything about any actual mortgage, because he’s got the authority to define anything as being under his authority. So, he can still buy up Citi’s bad credit card debt.

Some baby teeth: for assets the Secretary purchases without bidding by any other companies, the Secretary has the right to seek remuneration from any executive whose compensation is based on fraudulent statements made by that executive. For assets purchased via Dutch Auctions over $300M ($3e8), the Secretary shall prohibit new contracts with senior executives from having golden parachute provisions. (Senior executives == top five execs).

Dentures: The Secretary shall absolutely and without qualification seek to minimize long-term costs to the citizens via various activities, depending on his judgment. He shall also encourage other companies to act likewise. (He can satisfy this by typing the sentence, “I Hope Bank of America Treats Its Customers Nicely.”)

Okay, teeth: The Secretary shall not purchase assets directly unless he receives senior debt or preferred yet nonvoting shares; not sure why they specified non-voting. Basically, here’s the equity-sharing that the citizens get.
Plaque-inducing: However, the Secretary, when subsequently selling such assets, must type the sentence, “I hope the citizens don’t get screwed by this sale.”

The Secretary shall be able to not follow any rules in particular regarding purchases or sales of assets less than $100M ($1e8). So, he can buy a slightly-used lollipop from Citi for $99M ($9.9e7) without even being required to write the sentence, “I hope the citizens aren’t screwed by this.”

The Secretary shall think about whether or not financial institutions need to make public their off-balance-sheet transactions. (Doesn’t even need to share those thoughts with anyone; just think about it).

Total Money in Play at any one time: At any point in time, the Secretary is only allowed to float a total of $250B ($2.5e11). Unless the President says he’s allowed to go up to $350B ($3.5e11). The President can authorize up to $700B ($7e11) at any given time, but Congress can prevent that if they pass a joint resolution disapproving of the action, but they have to start talking about it no later than the third calendar day after the President tells them about it, and have to pass the joint resolution within 15 days.

There are some additional rules about these joint resolutions – (formal) discussion is limited to 5 hours each for the majority & minority leaders, and points of order against it are waived. Then there is a really confusing section that, it seems, requires that the House and Senate vote on the exact same resolutions. I’m not sure of this last one; it’s in Sec 115 (f) (1) (b) (ii) (i.e., page 46, line 20).

Use of Teeth which have historically brought some truth to light: The GAO has the right to any information the Secretary has regarding his transactions, and presumably has the right to talk to Congress.

The bill will expire 12/31/09, unless the Secretary wants to extend it to ~10/15/10.

Also, the US debt ceiling is bumped up to $11T ($1.13e13).

Also, the HOPE legislation no longer requires that modified loans be restricted to 38% (so they can say a loan is officially modified if the LTI is greater than 38%, meaning that).

Truth in Lending Teeth: The APR must be presented as has been the case in the past, except that if it’s inaccurate, the creditor must present an updated truth-in-lending statement when the loan closes. I’m guessing they’re closing a loophole wherein the creditors could technically abide by the truth-in-lending act by screwing over the borrowers, but I’m not clear on the act (and the blankity blank bailout language just describes text editing operations that occur in the TILA).

Toothless: The SEC can eliminate Mark-to-Market accounting requirements. (Meaning, when Deloitte and Touche lies in an audit, they’re no longer lying.)

Total US Debt (assuming 3.5e8 people): $31.4K per person, or $3.14e4.

Total allowable float at any given time: $714 per person, maybe four times that per family.

My issue for debate: Why did Congress have less than two weeks to debate this? More to the point, why did Congress decide not to discuss this until two weeks ago, when Bush finally showed his hand? In very recent public statements, pretty much everyone except Ron Paul said that there was nothing to worry about, until they decided to label it a crisis, at which point they had to produce legislation that no one could have enough time to really discuss.

And, pardon my French, why the f**k didn’t they model this legislation on the deal that Warren Buffet just made? He has a history of making rather intelligent decisions regarding money, and I’m sure he’d have been eager to write the entire thing for them.

Buffet bet on the bailout. He put 5 bill into Goldman. Goldman was going to squeeze out of 20 billion with the passage. He gambled. The market is gambling after all.

A lot to digest for comment (for me anyway) but thanks a million for the summary! Very cool of you and very handy for me.

Good job!

DENNIS’S PRINCIPLES OF MANAGEMENT BY CRISIS:[ol][li] To get action out of management, it is necessary to create the illusion of a crisis in the hope it will be acted on.[/li][li] Management will select actions or events and convert them to crises. It will then over-react.[/li] Management is incapable of recognizing a true crisis.[/ol]

They fluffed up the 3 page plan pretty good didn’t they?

This may not be the best place to put this, but I didn’t want to start a whole new thread.

I listened to Bush this morning on BBC News Hour and for the first time, I felt he was Presidential. I understand this is a needed thing (I’m not about to enter into the fray of arguing economists), and I think he did a fair job of NOT blaming anyone in particular. He actually sounded like a leader. Surely hell has frozen over.

I am so sick of finger pointing. Let’s get something done, before the demand for refrigerator boxes exceeds the demand fridges.

Thank you for the summary. I am now somewhat more appalled that such a thing was to be passed stat! with no discussion etc. Then again, stuff like this gets bogged down in discussion.

I’m not sure I like all that pony wishing or the Sec agreeing to “consider” or “think”.

And where (I know this is a minor thing, but it sticks in my craw) are the lids on the golden parachutes? They can live off their 10 million dollar bonuses. (I hope most of it was stock options in Lehman Bros etc). <no snide smiley, put one here>

Eh…well, not so sure myself.

If Wall Street claims, “Woe is me…the horror of this awful thing that was inflicted on us!” I am likely to be sympathetic. However, if they made their own bed (as I suspect is the case) I say let them lie in it.

Also, as regards to who will be controlling the money and who it will go to, I darn well want to know if these are the same people that got us here. I have no desire to reward the screw-ups nor let control remain with the screw-ups.

Alas since there is enough blame to go around several times I am sure those who should be tossed out on their ear (from CEOs to Cabinet Secretaries to Politicians of any stripe) will do a master level ass covereing trick and remain right where they are.

We are all together in that very large bed, regardless of who made it.

Unfortunately, this sort of thing has a ripple effect (sort of like Reagan’s “trickle down” but with even less money, but with more damage).

But don’t you see? They took those high risks with other people’s money, so of course they deserve to be well compensated, even if their gamble didn’t pay off. It’s the little guy’s fault for wanting a house in the first place… :rolleyes:
The let’s create a new financial product that we have no way of properly evaluating and sell millions of them, again and again and then one day, someone shouts, “the emperor has no clothes!” and now we need more of your money game sure is interesting.

IMO, they’ll all just change chairs, much like a game of work up in baseball.

I’m not usually vindictive, but I would so enjoy the sight of at least one Wall St hotshot crying as his Hampton house is foreclosed upon. Hell, I’l take a car being repo’ed…

I believe you mean: “…thanks a (1e6) for the summary!”


Honey, don’t you get it? This was Henry Paulson writing his own golden parachute on his way out of government!

Yes, the Star Chamber clause: no review etc. Did he really think that would fly? How arrogant are these clowns, anyway?

Paulson may or may not be a good guy. I do think he is acting in what he feels are the best interests of the market. Thing is, he’s forgotten (whether deliberately or not) a large piece of the puzzle: not Main St, but Elm St. Us, the middle class tax payers who are always left holding someone else’s baby.

Everyone’s always so worried about streets, but where’s the sympathy for those of us who live on avenues?

Avenues, Sweetums? I live in a lane.