Bail Out Plan Axed!

Unless you have been hiding under a rock the last few days, I am sure you have heard of the "Bail out plan" or more appropriately called the Emergency Economic Stabilization Act of 2008. This bail out plan was intended to help pull the USA out of it's current economic turmoil. Congress did not pass the bill. It was defeated by a vote of 228-205. As a result, the dow took a huge dive today, falling 777 points. The biggest decline since the day after the terrorists attack of 9/11.
Here is a brief summary of the proposed bill :

SUMMARY OF THE “EMERGENCY ECONOMIC STABILIZATION ACT OF 2008”
I. Stabilizing the Economy
The Emergency Economic Stabilization Act of 2008 (EESA) provides up to $700 billionto the Secretary of the Treasury to buy mortgages and other assets that are clogging thebalance sheets of financial institutions and making it difficult for working families, smallbusinesses, and other companies to access credit, which is vital to a strong and stableeconomy. EESA also establishes a program that would allow companies to insure theirtroubled assets.

II. Homeownership Preservation
EESA requires the Treasury to modify troubled loans – many the result of predatorylending practices – wherever possible to help American families keep their homes. Italso directs other federal agencies to modify loans that they own or control. Finally, itimproves the HOPE for Homeowners program by expanding eligibility and increasingthe tools available to the Department of Housing and Urban Development to help morefamilies keep their homes.

III. Taxpayer Protection
Taxpayers should not be expected to pay for Wall Street’s mistakes. The legislationrequires companies that sell some of their bad assets to the government to providewarrants so that taxpayers will benefit from any future growth these companies mayexperience as a result of participation in this program. The legislation also requires thePresident to submit legislation that would cover any losses to taxpayers resulting fromthis program from financial institutions.

IV. No Windfalls for Executives
Executives who made bad decisions should not be allowed to dump their bad assets onthe government, and then walk away with millions of dollars in bonuses. In order toparticipate in this program, companies will lose certain tax benefits and, in some cases,must limit executive pay. In addition, the bill limits “golden parachutes” and requiresthat unearned bonuses be returned.

V. Strong Oversight
Rather than giving the Treasury all the funds at once, the legislation gives the Treasury$250 billion immediately, then requires the President to certify that additional funds areneeded ($100 billion, then $350 billion subject to Congressional disapproval). TheTreasury must report on the use of the funds and the progress in addressing the crisis.EESA also establishes an Oversight Board so that the Treasury cannot act in an arbitrarymanner. It also establishes a special inspector general to protect against waste, fraud andabuse.

Congress will be meeting within the next few days to see if they can come to an agreement of some other sort and propose another bill that may help boost the current ecomonic crisis.
Will keep you posted!