Full text of the bailout bill (FREEP researchers needed)

Gonna post this everywhere to get it out there:

PROBLEM #1-IT CAN GO TO 700 BILLION WITHOUT A VOTE BY CONGRESS

3 (c) JOINT RESOLUTION OF DISAPPROVAL.— 4 (1) IN GENERAL.—Notwithstanding any other 5 provision of this section, the Secretary may not exer6 cise any authority to make purchases under this Act 7 with regard to any amount in excess of 8 $350,000,000,000 previously obligated, as described 9 in this section if, within 15 calendar days after the 10 date on which Congress receives a report of the plan 11 of the Secretary described in subsection (a)(3), there 12 is enacted into law a joint resolution disapproving 13 the plan of the Secretary with respect to such addi14 tional amount.

Translation: Unless Congress schedules a vote and says "no" within 15 days of the costs going over 350,000,000, it can go to 700 Billion automatically. This way every congressman can claim "I never voted "for" it to go to 700 Billion. Congress can just not vote at all and it can go to 700 Billion.

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PROBLEM #2-US TAXPAYERS ARE BAILING OUT FOREIGN BANKS

3 SEC. 112. COORDINATION WITH FOREIGN AUTHORITIES 4 AND CENTRAL BANKS. 5 The Secretary shall coordinate, as appropriate, with 6 foreign financial authorities and central banks to work to7 ward the establishment of similar programs by such au8 thorities and central banks. To the extent that such for9 eign financial authorities or banks hold troubled assets as 10 a result of extending financing to financial institutions 11 that have failed or defaulted on such financing, such trou12 bled assets qualify for purchase under section 101.

Translation:If foreign banks bought loans that people are defaulting on, US taxpayers will buy the bad loans from the foreign banks.

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PROBLEM #3-DEADBEATS UNJUSTLY ENRICHED WITH MORE EQUITY COMPARED TO PEOPLE WHO DILIGENTLY PAID THEIR MORTGAGES AND LOCKED IN RATES

9 SEC. 124. HOPE FOR HOMEOWNERS AMENDMENTS. 10 Section 257 of the National Housing Act (12 U.S.C. 11 1715z-23) is amended— 12 (1) in subsection (e)— 13 (A) in paragraph (1)(B), by inserting be14 fore ‘‘a ratio’’ the following: ‘‘, or thereafter is 15 likely to have, due to the terms of the mortgage 16 being reset,’’; 17 (B) in paragraph (2)(B), by inserting be18 fore the period at the end ‘‘(or such higher per19 centage as the Board determines, in the discre20 tion of the Board)’’; 21 (C) in paragraph (4)(A)— 22 (i) in the first sentence, by inserting 23 after ‘‘insured loan’’ the following: ‘‘and 24 any payments made under this para25 graph,’’; and 70 O:\AYO\AYO08C04.xml 1 (ii) by adding at the end the fol2 lowing: ‘‘Such actions may include making 3 payments, which shall be accepted as pay4 ment in full of all indebtedness under the 5 eligible mortgage, to any holder of an ex6 isting subordinate mortgage, in lieu of any 7 future appreciation payments authorized 8 under subparagraph (B).’’

Translation: If you paid your bills on time, were smart and locked in a fixed rate, even paying a fee (called a "point") to get a better rate-this bill does nothing for you. If you did not make all your payments, did a no-cost loan with a variable rate-this bill will lower your rates and the amount you owe on your mortgage.

(note-the #'s appearing in the middle of words denote the sections of the bill this information was cut and pasted from. This IS from the latest version of the bill.)

Clearly a botched social engineering scheme that drove up real estate, skewed financial markets behavior and now is putting the world economy in jeopardy. Still the blame is at the free markets court. Most people just don’t want to see it. We know there have been a few who warned this was going to happen. But not the Rats, they indulged. Even this bailing out does remind me of the New Deal which deepened and prolonged the recession. We also know that if a recession or depression is to come, which normally is very healthy, this bailout wouldn’t make a dent in developments to come. If looked at it from another perspective, the biggest tax hike has been put to the table and still the Rats walk away with it. I really don’t get it. Are Americans a large that desperate and willing to take hand outs and with it accepting socialism. Are we already in a serious recession of mind? (No offence meant to Freepers)

What you linked to is entitled a “discussion draft” whatever the heck that is. This MIGHT NOT be the actual bill and it certainly isn’t a finalized version.

three pages huh??

I appreciate you posting this info. I am going to include on my next post on KillTheBailout.com

If it has the word “ACORN” in it, everybody who votes for it should be hung from the nearest tree.

Other takes:

NRO-The Corner
Sunday, September 28, 2008

Time to Follow [Jack Fowler]

Just finished watching the House Republicans leaders’ press conference on how they are backing the re-crafted bailout deal, made more palatable by their diligent efforts, and urging GOP members to vote yes. Kudos to them and in particular to Eric Cantor: he is so dang impressive. When you expect your political leaders to step up, and they do, you must reciprocate by following and supporting them and if you do you’ll still be able to place your head on the pillow with a clear conscience. Conservatives should support them in backing the bailout plan. And then, when that is completed, roll up our sleeves and join Cantor & Co. as they work to craft and enact a broader strategy to improve America’s fiscal health.

09/28 08:56 PM

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NRO
September 27, 2008, 9:31 a.m.

A Paulson-Cantor Plan Is a Win-Win

Actually, for taxpayers, the bank rescue plan is a win-win-win-win. By Larry Kudlow
http://article.nationalreview.com/?q=YWE3ZTg5MDZjOTI2MDA4MjYxMGQ3ZDg1YzI5MTBmOWE =

The single-biggest mistake in the Paulson bank-rescue-plan marketing effort has been the failure to explain clearly how taxpayers are going to recoup $700 billion used to buy toxic assets at auction in order to unfreeze the banking system. In other words, folks don’t understand how taxpayers will be paid back, and may actually make profits, which will enable the new government debt to be erased after the Treasury bank-rescue is completed.

Here’s the key point: Any loan package bought by the Treasury will be 100 percent taxpayer owned. Period.

Let’s walk through this hypothetical for a moment. Through a market-driven auction, the Treasury will purchase some dollar amount say $100 billion of loans that banks will sell. The Treasury will then buy those loans at the prices that fill the auction, starting with the lowest prices and working up. Now, the Treasury will hold those bonds either to maturity or for a sale in the open market if rising prices in the market make that sale attractive. In other words, suppose the Treasury buys a bond package at 20 cents on the dollar. They hold it for a while, and if market conditions improve, they sell it for 50 cents on the dollar to some buyer (e.g., an investment fund, a private-equity fund, a hedgie). The Treasury will make the sale at the higher price in order to gain a profit for taxpayers.

In the meantime, as the Treasury holds the loans, the government will get monthly cash-flows coming in on the mortgages, or on any other loans that it owns. So it is win-win for taxpayers. First, taxpayers get the cash flow generated by the assets. (Something like a 10 percent interest rate.) Second, if the loan is sold for profit, the taxpayers will own that profit. And the new law must of course stipulate that all the cash flows and/or profits go for debt-reduction to protect taxpayers.

I don’t think a lot of folks understand this win-win scenario. Let me repeat: The taxpayers own the bonds the Treasury buys; the taxpayers own the cash flows generated by the bonds; the taxpayers own the profits when the bonds are sold; and the taxpayers benefit when the profits and cash flows are used to pay-down government debt.

Actually, for taxpayers, it’s a win-win-win-win.

Think about this. The troubled assets purchased by the Treasury right now are likely to be very under-priced because of the chaotic and frozen market conditions. But over time, through monthly cash-flow payments or through loan sales, taxpayers will get all their money back and in great likelihood a handsome profit.

I have been in conversation with leading House Republicans all day. And they understand these key points. Unfortunately, this understanding did not materialize in their original meeting with Mr. Paulson a few days ago. But now the actual reality is sinking in.

Another point: Republican leader Eric Cantor has an excellent idea for a federal bond insurance guarantee for straight mortgage-backed paper, financed by private-sector insurance premiums. That will improve investor confidence in mortgage bonds and will make those bonds highly marketable. Importantly, senior Treasury officials have told me that Mr. Paulson will accept the insurance idea as an option in the final bill, alongside the ability of the Treasury to purchase distressed assets.

Sources also tell me that other conditions will be necessary to bring the House GOP along. First, the ACORN slush fund must be removed. Second, the so-called union proxy to run a slate of corporate directors is a big problem. Third, all profits from the Treasury rescue mission must be used to reduce the national debt 100 percent. Fourth, Republican members are opposed to bankruptcy judges setting mortgage terms and interest rates (Sen. Obama also is opposed). Fifth, the so-called government equity ownership of banks is distasteful because it effectively creates a corporate tax increase on banks at a time when they are struggling. And last, the Treasury secretary’s request for $700 billion is regarded as way too high.

Essentially, House Republican leaders want a slimmer, cleaner Paulson plan supplemented by Mr. Cantor’s mortgage-bond insurance program. I think it’s a good package that would be great news for stock and bond markets that are now ailing badly. It would set the stage for a gradual return to normalcy on the part of bank lenders, including loans to small businesses, consumers, and homeowners. It would be a pro-growth package at a time when the economy desperately needs a prosperity tonic.

Larry Kudlow, NRO’s Economics Editor, is host of CNBC’s Kudlow & Company and author of the daily web blog, Kudlow’s Money Politic$.