Sunday, September 21, 2008

A Price Must Be Paid

The Wall Street Journal has the text of the $700 billion Wall Street bailout. It is egregious.

Section 4 allows for only vague and infrequent reports to Congress.
Within three months of the first exercise of the authority granted in section 2(a), and semiannually thereafter, the Secretary shall report to the Committees on the Budget, Financial Services, and Ways and Means of the House of Representatives and the Committees on the Budget, Finance, and Banking, Housing, and Urban Affairs of the Senate with respect to the authorities exercised under this Act and the considerations required by section 3.
Improvement to Section 4
The Treasury Secretary must submit written reports under penalty of perjury to both houses of Congress on a monthly basis. The reports must be fully public with no information redacted. The reports must list all transactions under this plan, the book value of the debt being acquired, the current market value, and the price the Government paid for the debt.

All sales of assets under this Act must be similarly reported (book value, current value, price paid to the Government). If the price paid to the Government is less than the current value or the price the Government paid to purchase the asset the Treasury Sec. must explain to Congress in detail the reason for this discrepancy.

Section 8 grants absolute autonomous power to the Treasury Sec.
Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.
Improvement to Section 8
All existing laws apply to the Secretary pursuant to the authority of this Act. Congress has the absolute right to review the actions and decisions of the Secretary and to appoint such reviewing authorities Congress deems necessary.

(Stiff criminal penalties for defrauding the Government under this program must be stated in the law. Such defrauding to include misrepresenting the book or current value of the debt. Both the corporation and its responsible officers are legally responsible for the information provided by the corporation it must be provided under penalty of perjury.)

Additional Section
The accounting books for any corporation participating in this program are to be open in their entity to examination by the Treasury Department or the United States Congress for as long as the Federal Government holds the debt acquired.
There is more I would like but the above are the minimum changes to make the Paulson Bank Bailout Act acceptable. My wish list improvements are:
  • Every corporation participating in this program is restricted to the compensation it pays to all employees, individual consultants, and board members. For five years from first participation no individual may receive total compensation (salary, bonuses, stock options) in excess of twelve times the median household salary for the preceding years. In 2007 the median household salary was $50,233 meaning the highest compensation allowed for 2008 would be $602,796.
  • The government is to receive equity in the corporation equal to some percentage (say 20%) of the difference between the book value and the price paid for the assets purchased by the Government. This equity to be used to help homeowners facing foreclosure.

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