Loophole added to bailout bill...

[Eric J in MN]

...will let the government pay more for the "troubled assets" than the seller did.

The Chris Dodd bill (September 25) and the Nancy Pelosi bill (Sepember 28) both say:

"Section 101

(e) PREVENTING UNJUST ENRICHMENT.—In making purchases under the authority of this Act, the Secretary shall take such steps as may be necessary to prevent unjust enrichment of financial institutions participating in a program established under this section, including by preventing the resale of a troubled asset to the Secretary at a higher price than what the seller paid to purchase the asset."

However, the Pelsosi bill adds a loophole:

"This subsection does not apply to troubled assets acquired in a merger or acquisition, or a purchase of assets from a financial institution in conservatorship or receivership, or that has initiated bankruptcy proceedings under title 11, United States Code."

[snappyturtle]

1. Here we go! After reading the loophole, who does the subsection apply to? nt

[Subdivisions]

2. This fucking bill is nothing but toilet paper! It's shit! n/t

[SoCalDem]

5. Just like the used-car warranty that excludes

"normal wear and tear"...

duh

EVERYTHING that ever goes wrong with that car will be attributed to "normal wear and tear"..and you are just out that $1k extra you paid ...


it's a sucker's agreement..

[Eric J in MN]

3. Another difference in the bills...

...is that Chris Dodd's bill lets bankruptcy judges re-write mortages within narrow parameters.

Nancy Pelosi's bill doesn't.

[lonestarnot]

4. Oh now I'm really fucked up. I thought there was one bill, with apparently several drafts.

Where can I find the last draft of the bailout bill?

[Eric J in MN]

6. In my original post, I put links...

...to the Senator Chris Dodd version of Sept 25 and the Rep. Nancy Pelosi version of Sept 28.

I hyperlinked on "bill" twice in the second sentence of my original post.

[lonestarnot]

7. Sorry, I just got a little excited over the

fucking I'm about to read about. :P

[mzmolly]

11. Republicans demanded she remove

that portion to my understanding?

[Junkdrawer]

8. The latest date for revealing the guidelines was extended to 45 days instead of 30...

The Election is in 36 days...

Old Language:

(d) PROGRAM GUIDELINES.—Before the earlier of the end of the 2-business day period beginning on the date of the first exercise of the authority under this section or the end of the 30-day period beginning on the date of the enactment of this Act, the Secretary shall publish program guidelines, including the following:
(1) Mechanisms for purchasing troubled assets.
(2) Methods for pricing and valuing troubled
assets.
(3) Procedures for selecting asset managers.
(4) Criteria for identifying troubled assets for
purchase.

http://banking.senate.gov/public/_files/LegislativeTextofChairmansDoddsproposalfortheTreasuryBailoutplanAYO08B68_xml.pdf

New Language:

(d) PROGRAM GUIDELINES.—Before the earlier of the end of the 2-business-day period beginning on the date of the first purchase of troubled assets pursuant to the authority under this section or the end of the 45-day period beginning on the date of enactment of this Act, the Secretary shall publish program guidelines, including the following:
(1) Mechanisms for purchasing troubled assets.
(2) Methods for pricing and valuing troubled assets.
(3) Procedures for selecting asset managers.
(4) Criteria for identifying troubled assets for purchase.

[Eric J in MN]

9. After he makes his first purchase, he has to publish...

...his guidelines two days later.

[ColbertWatcher]

10. Please. If Dumbya signs it, it will be the GOP Bailout.

We have to stop blaming ourselves for the GOP's messes.

We're going to have to fix them, but we shouldn't take the blame for them.

[scarletwoman]

14. There's a very simple way to not blame the Dems; they can refuse to pass it.

After all, their constituents are 100:1 AGAINST it, so their asses would be well-covered.

However, it would seem that our Dem leaders really want is for their ASSETS to be covered, which is why they're throwing us under the bus.

sw

[Eric J in MN]

12. The Pelosi version also drops the requirement for a non-binding vote on executive pay.

=============================

(2) a requirement that the financial institution
2 afford to all shareholders the opportunity to cast a
3 non-binding vote, in any annual proxy solicitation
4 and shareholder vote, on the executive compensation
5 to be provide to the executive officers of the financial
6 institution;
=============================

Above is in Dodd bill of Sept 25, but not Pelosi bill of Sept 28.

A non-binding vote isn't much, but it was too much for Nancy Pelosi to demand.

[TexasObserver]

13. the exception they can drive a truck through ... a Brinks Truck

If you have an agreement with 100 pages, it only takes one cleverly written exception to gut the entire thing.

[nashville_brook]

15. according to MSNBC, Citigroup and Wachovia will benefit from this loophole

http://www.msnbc.msn.com/id/26933280/page/2/

But the government’s proposed $700 billion bailout plan could prove to be the deal’s silver lining.

While the plan broadly aims to prevent banks from profiting on the sale of troubled assets to the government, there is an exception made for assets acquired in a merger or buyout, or from companies that have filed for bankruptcy.

This detail could allow Citigroup to sell toxic mortgages and other assets it gained from Wachovia for a higher price than the bank actually paid for them.

makes you wonder if the deal was contingent on this language in the bill.