Monday, September 29, 2008

READING THE FINE PRINT: BAILOUT IS STILL A DEAL PRIMARILY FOR BANKERS


I read through the bill and intended to write a full analysis. Fortunately, ABC News has captured some of the same concerns I had: Does the Bailout Ignore Homeowners, Execs?

Although Pelosi, Reed and other members of Congress announced with much fanfare that the legislation would include "relief" for homeowners and cap corporate salaries, the proposed legislation only moderately delivers those promises. For example, the limit on executive salary only applies if the government purchases $300 million or more in assets from the company. Although the bill would prohibit "golden parachutes," it would exempt existing employment agreements from this provision. The proposed legislation would only impose additional tax burdens on companies that pay extremely high salaries; it would not explicitly limit those salaries.

As for homeowners struggling to pay their mortgages, the proposed legislation would only help those persons whose mortgages the government purchases. Also, the legislation only requires the Secretary of the Treasury to write a plan to "mitigate" foreclosures and to help funnel distressed borrowers through existing assistance programs. The bill does not provide any money at all for foreclosure prevention.

I heard Dennis Kucinich rail against the bill today on C-Span. It was a great speech. Also, true conservatives in the House (i.e., those who hate "big government") seem bothered as well. But the Senate seems bent on getting the bill passed. After all, it probably will help the economy somewhat, but most importantly, two members of the Senate are running for president. Their colleagues do not want voters to view their respective parties as responsible for blocking a bill designed to save banks (or was it "the" economy?). Tune in for more updates.

2 comments:

ken said...

700,000,000,000 divided by 350,000,000 is about $ 2000 for every person in the United States. Not just families, but everybody.

That would be $10000 for my family.

I may be talking rather ignorantly, but I wonder if you told everyone you must invest or save half the money your household receives and purchase items with the other half, you would have a better use of the money than the plans now.

Those who have no investments would be forced to start investment accounts or savings accounts which would create a pathway to easily add to the account. This would create a influx of new money into the market and or savings accounts. The purchasing would create a demand for more products and services and jobs. Which would create more people making income and paying taxes.

This trully would be a conservative solution (tax cut, well except those who don't pay taxes also receive)) and also cover Obama's philosophy of trickle up economics.

Darren Lenard Hutchinson said...

Forced "savings"? I am not sure that works constitutionally. Social security is a "tax," so that analogy does not work. I do believe that we can do more to encourage savings. Instead, this whole mess started because our government, Wall Street, realtors, and other entities encouraged debt-financed spending. Not a good thing in all cases.

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