Posted on 09/30/2008 6:53:14 PM PDT by maccaca
A group of House Republicans is cobbling together a proposal to stabilize financial markets that can serve as an alternative to the plan proposed by Treasury Secretary Henry Paulson, legislative sources have told CNBC.
The failure of Monday's vote on the $700 billion bailout package—which these Republicans doubt is likely to cause an economic "doomsday" scenario—emboldened the group to press forward with its own plan, sources said.
The group pressing the alternative plan is doing so for largely ideological reasons: They're opposed to the federal government taking a large role in financial markets, sources say.
Components of the alternative plan including the following, according to sources:
Require the Treasury Department to guarantee, at up to 100 percent, bank losses resulting from failed mortgage-backed securities originated prior to the plan's enactment. Such insurance, supporters say, would provide immediate value to the securities and a foundation for which they could then be sold. The Treasury Department would finance that insurance by assessing a premium on outstanding mortgage-backed securities.
Allow companies to carry back losses arising in tax years ending in 2007, 2008, or 2009 back five years, generating a tax refund and immediate capital
Allow a "repatriation window" for profits earned by U.S. firms overseas. Such repatriation amounts would not be taxed if invested in distressed debt (as defined by Treasury) for at least one year.
Allow banks to treat losses on shares of preferred stock in Fannie Mae and Freddie Mac as ordinary losses, not as capital losses
Suspend the capital gains tax rate for two years
Limit backing of high-risk loans by Fannie Mae and Freddie Mac
Schedule Fannie and Freddie for privatization
Suspend "mark-to-market" accounting until the SEC can issue new guidelines that will allow firms to mark these assets to their true economic value
Stabilize the dollar by repealing the Humphrey-Hawkins Full Employment Act, which alternative bailout supporters say diverts the Federal Reserve's attention from long-term price stability to short-term economic growth
...
Preferred stock. Good first step.
Is this good? Is this what the Senate will vote on?
Looks good to me. That suspension of capital gains taxes will get knocked out because it undermines the who purpose of Obama and liberalism, though.
Hope it sets up something like the resolution trust corportation.
"Show me just what Mohammed brought that was new, and there you will find things only evil and inhuman, such as his command to spread by the sword the faith he preached." - Manuel II Palelologus
Fine and dandy. But what about the fact the housing market still has a long way to drop. I think it was overvalued since 2003 and needs to go down to those levels.
"Allow a "repatriation window" for profits earned by U.S. firms overseas. Such repatriation amounts would not be taxed if invested in distressed debt"
Allow a “repatriation window” for profits earned by U.S. firms overseas. Such repatriation amounts would not be taxed if invested in distressed debt (as defined by Treasury) for at least one year.
Pretty Good Idea!!!
I would like to add some resignations to the list of features.
But after two years what then happens to the Capital Gains tax rate?
this sounds like a bad bet to me.
A much better plan, IMHO, and it addresses some of the underlying root causes of the problem.
Didn’t 0bama say today that he is open to other ideas? Well, we shall see if he is as good as his word. Not holing my breath though.
I have a sick feeling that the bill the Senate is voting on will pass the house. I give the odds 80% that it does unfortunately.
pubbies,
showing life?
There’s some very good, creative ideas here. I especially like the repatriation of offshore money.
It is about time! It is ridiculous to even think about a plan that does not address the cause of the problem in the first place.
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