Rescue Patrol (Memo from Republican leadership- not clear WHICH ones, though..)

The Corner at National Review ^ | 28 August 2008

[SE Mom]

Rescue Patrol [Kathryn Jean Lopez]

Republican leadership is also sending this around:

Following is myth/fact document regarding the current draft of the economic rescue legislation.

Myth: Windfall for ACORN.

Fact: The Frank-Dodd proposal created an affordable housing slush fund and directed 20 percent of net benefits from the program to be directed to ACORN-type organizations. The proposed compromise does not include any affordable housing slush fund and directs all net benefits back to the Treasury to pay down the national debt.

Myth: Tax increase on financial industry.

Fact: The proposed compromise imposes NO tax on the financial services industry. The proposed compromise simply requires a proposal from the Administration to recoup any losses after five years.

Fact: The proposed compromise includes tax cuts for struggling community banks.

Myth: Blank check for $700 billion with little accountability.

Fact: In general, the Treasury Secretary is limited to purchasing up to $250 billion outstanding at any one time. If the Treasury needs to use another $100 billion, the President must certify this action and report to Congress. Further spending requires Congressional action.

Myth: Treasury plan is the only option available.

Fact: Treasury is given multiple options to deal with the current economic crisis, including insurance, public/private auctions, loan guarantees, and direct support to financial institutions.

Fact: Further, Treasury is MANDATED to create an insurance program (Section 102) that protects the taxpayers and requires companies that wish to participate in this program to have some skin in the game by paying risk-based premiums.

Myth: The taxpayer is not adequately protected.

Fact: The proposed compromise includes strong taxpayer protections. Treasury’s proposal had minimal oversight to protect taxpayer dollars. The proposed compromise enhanced the oversight structure by creating a Financial Stability Oversight Board, a Special Inspector General, and a Congressional Oversight Panel.

All AIG-type deals require mandatory equity interest in order to provide taxpayers with potential future benefits. All auctions require a percentage of equity interest based on participation in the program.

Requires the Secretary to develop regulations/guidelines necessary to prohibit or, in specific cases, manage any conflicts of interest with respect to contractors, advisors, and asset managers.

Myth: The taxpayer does not benefit from Treasury bailouts.

Fact: The proposed compromise (Section 113) requires mandatory equity interest in scenarios like AIG. The proposed compromise also allows Treasury to take an equity interest in the program generally.

Myth: Treasury will never use the insurance option.

Fact: Treasury is mandated (Section 102) to establish an insurance program and set risk-based premiums. This will protect taxpayers by requiring the beneficiaries of the insurance program to pay risk-based premiums. Treasury further shall collect premiums

mandatory equity interest in scenarios like AIG. The proposed compromise also allows Treasury to take an equity interest in the program generally.

09/28 12:49 PM

[SE Mom]

The latest from The Hill

[SE Mom]

Headache ping

[SE Mom]

Now being reported on FOX that the done deal is not a done deal - House GOP still not ok with bill as is- so who knows..

[penelopesire]

lol...headache is right! Looking better though..thanks to the patriots in the house!

[yoe]

Getting the ‘house legal eagle’ to go over this list. Meanwhile moi wonders why the nation isn’t screaming for the heads of Barney Frank and Chris Dodd or making a loud noise about the foulness of Harry Reid’s attempts to politicize the bail out bill. These people should be behind bars for their cronyism and deceit to the nation.

[penelopesire]

The dems probably tried again to sneak in ACORN like pork again...lol..and the House Republicans caught it.

[SE Mom]

My thinking is- Congress wants to pass the bill- then the bad guys will be dealt with. Whether Dodd or Frank will get the orange jumpsuit they deserve- time will tell...

[Kimberly GG]

Fox reporting conservatives say no deal. House conservatives press conference suppose to happen soon.

[padre35]

The slush fund is alive and well folks, not in the bailout, but in the “Fannie Mae Reform” that happened in May.

A percentage of FNM profits go into a affordable housing “trust fun” which cements poor practices into FNM and keeps the slush fund alive.

[javachip]

All auctions require a percentage of equity interest based on participation in the program.

While this sounds good, it will largely defeat the purpose of the bailout. Banks with strong balance sheets won't participate in the program because of the equity dilution provisions.

Troubled banks that have little choice will participate and come out with clean balance sheets. But, they will need to keep some of the new capital to strengthen their balance sheets so only part of the Treasury funds will flow through to the credit markets.

They're selling the equity provisions as allowing the taxpayer to participate in any upside as things improve, which may be true. However, the plan reduces the benefits of pumping money into the system. Strong banks that could put all of the new funds to work in the credit markets are discouraged from participating. Weak banks that do participate will only be able to push some of the money into the credit markets.

The share dilution doesn't impact the banks operations. Troubled banks come out with clean balance sheets while the better managed institutions struggle to clean up without the gov't money. Therefore, this plan has the unintended consequence of putting good management at a disadvantage to incompetence. That just one of the obvious unintended consequences. We have no clue what other serious market distortions may result from dumping this much money into the system.

This is a financial version of the old Fram commercials, with a twist. "You can pay me now, or you can pay me later" has morphed into "You will pay now and you will pay later."

[McGruff]

Let the democrats pass this pig. They created it.

[yoe]

Depending on what the word "current" means i.e., an hour ago or 24 hours ago....this seems to be a list that want the Republicans to shut up. ACORN for instance, was not a myth and may still be hidden in the text...a la Reid. Read carefully...call your elected and ask for a Public text of the draft...I don't want to be sold down the drain for "the greater good"....let Franks, Reid, Dodd etc pay for this mess.

when the Democrats begin to act responsively and fire people like Franks and Dodd, I will begin to believe them. Isn't Pelosi's congress a beaut????

[Keith in Iowa]

Republican Leadership = Oxymoron.