Well, if anything passes, no matter what it is, it will not be very palatable to us conservatives. But McCain’s plan is much better, because it basically means that only institutions in truly terrible situations will sell to the fund. There is no way a CEO is going to take a $20-30 million pay cut just so he can unload some inconvenient positions. This would be a buyer of last resort, a backstop on the market. It would enable Washington to differentiate between true tears and crocodile tears, which isn’t easy for them in the current situation.
Oversight is clearly needed. McCain is right on that. And there needs to be something in there about the reverse auction* or some such thing, because otherwise the Paulson will overpay, as he fully intends to in order to boost his Goldman shares and help his CEO buddies on Wall Street. Bernanke basically send yesterday they plan to buy these things for way more than sellers are asking.
*Reverse auction means sellers put in the prices they want to offer this stuff at, and you buy up starting at the lowest prices until you get filled. It creates an incentive for sellers to lowball and helps ensure the taxpayers actually profit from this. Bernanke and Paulson want to intentionally overpay for some reason no one can figure out (because they are behaving dishonestly).