Another good idea that probably won't happen

Submitted by stillnotking on Mon, 09/22/2008 - 9:29pm. Tags:

Economics and Business

Chris Dodd is proposing that if the government is going into business, it should, y'know, negotiate:

Sept. 22 (Bloomberg) -- Senate Banking Committee Chairman Chris Dodd offered an alternative today to the Bush administration's financial rescue plan aimed at giving the U.S. Treasury an equity stake when it helps companies burdened by debt.

Dodd, a Connecticut Democrat, is circulating a draft of his bill as Congress seeks to deal with a financial crisis that has been called the U.S.'s worst since the Great Depression.

The Bush administration is proposing a $700 billion plan to buy devalued assets from investment firms to keep the financial system from coming to a halt. Democrats have pledged to act quickly on the measure, even as they seek to create an oversight structure, limit the compensation of executives at the companies benefiting from the rescue and provide mortgage relief for struggling borrowers.

``We cannot just turn over $700 billion in taxpayer money and not insist that that taxpayer is going to be protected in this,'' Dodd told reporters yesterday.

What a party pooper. No worries, though:

Treasury Secretary Henry Paulson has urged Congress to pass legislation without delay and without linking it to new programs.

``We need this to be clean and quick, and we need to get it in place,'' Paulson said yesterday in an interview with ABC News.

Surprising he didn't find a way to work WMDs in there somewhere, but maybe tomorrow.

Dodd is also proposing to limit CEO salaries, a step that misses the point, in my view. CEOs aren't paid to perform; they're paid to incentivize SVPs to perform, and they're paid to incentivize VPs to perform, and so on, all the way down to the mail room. The end state of corporate capitalism is probably a company that pays its top executive a million a day to play golf, and that's not necessarily a bad thing.
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The other day I heard that ignorance and apathy are sweeping the country. I didn't know that, but I don't really care.

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Thank you Chris Dodd and Barney Frank (#122799)

by HankP on Mon, 09/22/2008 - 11:35pm

I'm impressed that they came up with a much better draft plan on such short notice.

Let's also make sure we don't forget some of the changes Paulson and Wall Street have made in the past few days -

- Bailout to include foreign banks.

- Changing the assets that can be purchased from "mortgage based assets" to include "any other financial instrument", which includes ~~just about~~ anything.

- Morgan Stanley and Goldman Sachs Group have decided to become bank holding companies, not because they want to get into banking but because they want to get in line for the handout.

- The Treasury has floated a plan with industry executives that envisions the $700 billion in bad mortgage debts being bought by the government will be run by five to ten outside asset managers - in other words, the people who f^%ked up in the first place will have a new chance to f*&k things up again.

- Paulson warned against adding a measure that has been under consideration to limit compensation for executives at the companies selling these illiquid assets. "We don't want to make (the legislation) punitive," he said. The hell we don't. I saw Sen. Shelby pushing this line on Friday, before virtually everyone in the US indicated over the weekend that the plan is a virtual giveaway. Even Republicans are against it now, they see what the polling is telling them in an election year.

I would have liked to see more coordination with the Obama campaign, but I guess you can't have everything.

I blame it all on the Internet

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Oh, it'll happen... (#122796)

by Wagster on Mon, 09/22/2008 - 10:22pm

Though probably not to the extent Dodd would like. It seems like the current state of negotiations is to give Treasury an option to buy equity stakes, depending on circumstances, and that Treasury has already conceded the point that far at least.

More Wagster!

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