Dodd’s Bailout Draft Could Give Companies’ Shares to Government–Wall Street Journal headline, September 22, 2008
It would almost be better to force each of these Wall Street sharks adopt a mortgage.
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Wall Street Journal
SEPTEMBER 22, 2008, 2:41 P.M. ET
By DAMIAN PALETTA
WASHINGTON — Senate Democrats want to add tough new measures to the Treasury Department’s proposal to bail out financial firms, including strict limits on executive compensation and a provision that would allow the government to take shares of any financial institution that participates in the program.
Senate Banking Committee Chairman Christopher Dodd of Connecticut began circulating his 44-page draft Sunday night. The draft is likely to prove problematic for the Bush administration, which has tried to prevent lawmakers from making big changes to a much simpler proposal it unveiled over the weekend. Treasury’s plan would allow the government to buy up to $700 billion in mortgage-related assets from banks and others to prevent a worsening of the financial market turmoil.
Congress may raise the cost of a $700 billion market-rescue deal by adding a new economic stimulus plan to benefit taxpayers, according to Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee. (Sept. 22)
Lawmakers hope to finalize a plan by the end of the week, but multiple obstacles remain.
Sen. Dodd’s plan would not allow the Treasury Department to purchase any assets “unless the Secretary receives contingent shares in the financial institution from which such assets are to be purchased equal in value to the purchase price of the assets to be purchased.”