I was just skimming through an article on yahoo, and it looks like congress came up with a plan of action for this bailout. They call it a rescue, but I still call it a bail. In the end, it seems as if Ol' King Henry has gotten his wish after all... that is of course, with a few restrictions.
Yes, the bailout IS going to be passed. Instead of posting a long droning article on the goods, I'll list the key points and then link you to the article. Overall, I am very disappointed at this agreement.
- The plan calls for the Treasury Department to buy deeply distressed mortgage-backed securities and other bad debts held by banks and other investors. The money should help troubled lenders make new loans and keep credit lines open. The government would later try to sell the discounted loan packages at the best possible price
- At the insistence of House Republicans, some money would be devoted to a program that would encourage holders of distressed mortgage-backed securities to keep them and buy government insurance to cover defaults
- To help struggling homeowners, the plan requires the government to try renegotiating the bad mortgages it acquires with the aim of lowering borrowers' monthly payments so they can keep their homes.
- Also, the government would receive stock warrants in return for the bailout relief, giving taxpayers a chance to share in financial companies' future profits.
Here is something that caught my eye from the article which had my stomach in knots. (below)
"Money for the rescue plan would be phased in, he said. The first $350 billion would be available as soon as the president requested it. Congress could try to block later amounts if it believed the program was not working. The president could veto such a move, however, requiring extra large margins in the House and Senate to override."
So that basically means that Congress has the authority to stop payments if the rescue plan proved to be faulty. Even still, the President can stop that from happening. So even if this plan is a total disaster, the Executive branch still has the upper hand. So much for checks and balances.
Seriously, I want to know what you think. Do you think these institutions should deserve a bailout. Do you really think that if we let these banks fail, we let the economy fail. Can't we just let them fail? Why take on a risk of risky business. I'd love to hear your comments. It will help me gain some perspective on this matter. readmore »»