Democrats got many concessions in bailout

Despite all the oversight and restrictions Congress added to Paulson’s original proposal, the Treasury secretary will still have wide latitude in deciding such things as how to value the toxic assets and what experts to hire to run the program.

Paulson, who lost in an effort to have his decisions exempted from congressional review, has indicated that he expects to use a type of “reverse” auction in which the companies with the winning bids will be the ones willing to take less, say 50 cents on the dollar rather than 60 cents on the dollar, for the assets.

Private analysts said they believe the plan will give critical support to the financial system, helping to establish a vibrant market for hundreds of billions of dollars in mortgage assets that at the moment can’t be priced because no one wants to purchase them.

Brian Bethune, chief U.S. financial economist for Global Insight, a Lexington, Mass., economic consulting firm, said Sunday that he believed the bailout plan “will provide some critical life support for the U.S. financial system, which has been hit by a very dangerous escalation in volatility in turmoil since early July.”

Asked on CBS’s “60 Minutes” Sunday night what the government will do if the $700 billion plan doesn’t work, Paulson said, “It’s gotta do it and we’re going to make this work and we’re going to do what it takes to work.”

Among the key segments of the bill:

EXECUTIVE PAY. Restrictions would be imposed on the compensation received by executives whose companies sell some of their bad assets through the government’s purchase program. There would be tax restrictions on executive pay over $500,000 and limits on so-called “golden parachutes” for executives who leave the companies getting government bailouts.

OVERSIGHT. The Treasury will be required to provide details of its purchases of bad assets within two days of the transaction. Oversight boards would be created including one with members selected by Democratic and Republican leaders in the House and Senate and one that will include top government officials.

More on this story Live vote: Was it the right thing to do? Newsvine: Discuss whether bailout is the answer

TAXPAYER PROTECTION. Taxpayers would be given ownership stakes in companies whose bad assets are purchased and after five years if the government is facing a loss in the program then the president will be required to submit a plan on how to recoup a portion of the losses from the companies that participated in the program.

A proposal floated that did not make the final version of the bill:

HELP FOR TROUBLED HOMEOWNERS. They failed in an effort to give judges the power to modify mortgage terms for people who have filed for bankruptcy and Democrats were unable to get approval for part of any profits the government might receive to go to help people facing mortgage defaults.

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