Pay attention Hoosiers (and all interested parties!)
Members of the Obama family will be at the Gary,Indiana Barack Obama for President Campaign Office, 201 E. 5th Ave., October 4, at 10 a.m. to kick-off a canvass effort.
Members of the Obama family will canvass with volunteers as well.
Feel free to bring your camera and please, BE FIRED UP!
LET'S TURN IT BLUE INDIANA!
West
Head east on 12/20 which is 5th Avenue, cross Broadway and look right for the Obama sign. The campaign office is across the street from the Fire Station.
East
Head west on 12/20 you will be on 4th Ave. Turn left at Broadway (where City Hall sits) and turn left at 12/20 (first signal) or 5th Avenue and look to the right for the campaign office sign.
Monday, September 29, 2008
Going back to the drawing table
Congress promised to "go back to the drawing table," as soon as possible to hammer out another deal.
Meanwhile, as of 2 p.m. CT the Dow sunk to -575.93 points.
Barack Obama, speaking from Colorado, said we shouldn't have gotten America into the financial crisis in the first place.
"We meet here at a time of great uncertainty."
Greed, is the cause, he said.
However, businesses need to make payroll.
"Get this done...step up to the plate," he called out to congress but there is no sign of a re-vote. Rosh Shoshana is upon us.
Barack said he would make sure after he is elected, that the American people would get their money back.
There was no immediate word from anyone working for John McCain.
Many blamed House Speaker Nancy Pelosi for not listening and not delivering votes. How in the hell can this be the house speaker's fault? She didn't vote for President Bush or anyone in his administration! This mess we are in is the direct fault of the American people who voted twice for President Bush. They must have liked what he was talking about. Do you like it now?Nothing personal, Mr. President but this situation is very scary, and I expected this bill to breeze through the House.
During the olden times in the Wild Wild West, those responsible would be dragged into the public square and hanged--charged with witchcraft, no doubt, but hanged.
But these aren't the olden times. These are new and modern times with a Wild West financial mentality. The only thing being killed is the American Economy and a little bit of our spirit along with it.
Meanwhile, as of 2 p.m. CT the Dow sunk to -575.93 points.
Barack Obama, speaking from Colorado, said we shouldn't have gotten America into the financial crisis in the first place.
"We meet here at a time of great uncertainty."
Greed, is the cause, he said.
However, businesses need to make payroll.
"Get this done...step up to the plate," he called out to congress but there is no sign of a re-vote. Rosh Shoshana is upon us.
Barack said he would make sure after he is elected, that the American people would get their money back.
There was no immediate word from anyone working for John McCain.
Many blamed House Speaker Nancy Pelosi for not listening and not delivering votes. How in the hell can this be the house speaker's fault? She didn't vote for President Bush or anyone in his administration! This mess we are in is the direct fault of the American people who voted twice for President Bush. They must have liked what he was talking about. Do you like it now?Nothing personal, Mr. President but this situation is very scary, and I expected this bill to breeze through the House.
During the olden times in the Wild Wild West, those responsible would be dragged into the public square and hanged--charged with witchcraft, no doubt, but hanged.
But these aren't the olden times. These are new and modern times with a Wild West financial mentality. The only thing being killed is the American Economy and a little bit of our spirit along with it.
Uggh! An "Imperfect bill" does not pass the House vote inspite of 3-hour general debate--Dow sinks 500 points
Imadeamesss.com--U.S. Rep. Keith Ellison (D-Minnesota) said he has a friend who tried to float a loan for her charter
school to meet payroll as she has done in the past. She could not do so. This action put everyone who
worked at the school in jeopardy of not having a job. These business scenarios are playing out all across America.
These scenarios are a part of the reason a rescue package is needed, some say. However, the wrong vote or the perceived
wrong vote will cost incumbents their seat on the Hill, newscasters said.
Spenser Bachus a Republican from Alabama said he will take the political risk and vote yes for the
legalisation. He received a round of healthy applause. Many other Republicans heard no such applause.
Many republicans are unwilling to sign on to the legislation.
Republican Congresswoman from Colorado, Marilyn Musgrave, said she doesn't want to vote for a
"bailout" for Wall Street.
Sixth district Minnesota Republican from St. Cloud Hugo, Michelle Bachman, said banks are prohibited
from making loans and that is "why we have a credit crisis."
Apparently, some Republicans are concerned about first tier creditors. In absence of fraud they want
FDIC insurance for them.
D-Illinois Rep. Rahm Emauel said during the 3-hour general debate that unregulated banks are the ones
going under. Banks that are regulated are not, he said.
House flipping a problem.
"Our job is not done until we address the recession on Main Street" he said.
They put out the fire he said but, the remaining days will be spent finding out who started the fire
and put the responsible arsonist in jail" he said.
Dennis Kucinich, D-Ohio, said the legislation will not keep people in their homes. He submitted to
record, expert witness testimony on this issue.
"This bill is about Wall Street."
Republican from Kansas, Rep. Todd Tiahrt said they were being rushed to act under an "artificial
deadline" said fear shouldn't guide decision.
New York Queens Dem. Rep. Gregory Meeks compared the Wall Street financial debacle to a drunk driver
that needs to be rescued.
Markets in the U.S. and world wide had been sliding downwards since their open.
"We have an imperfect product," Ohio Republican, John Boehner said and he doubts it has the votes to
pass. He urged people in the room to think about their friends who will lose jobs and retirees whose
money will dry up.
"This congress has to do its job. No one has come her for this Mud Sandwich. I didn't come here to
vote for bills like this."
He said a vote for the bill will separate boys from men and women from girls.
He urged them to look into their souls. He asked them, on both sides of the isle, to vote for the
imperfect bill. He drew a healthy round of applause.
Speaker of the House Nancy Pelosi (D-San Fransisco) said approving the legislation is a part of the
cost of the Bush failed economic policies. She said the Clinton administration's budget surplus
trajectory was eaten up in two years.
She also said the anything goes mentality is over.
"The party is over in that respect. (The present policies) didn't create jobs or capital but chaos."
She said Ben Bernake is the best known expert on the Great Depression and he said this fiscal crisis
is once in a 100 years.
"It sneaked up on us on little cat feet," she said.
But how?
She said they will continue to work towards that end
She talked about the wide ranging power the original draft held. She said working together in a bi-
partisan way is how they made improvements.
The American people responded almost immediately, she said. The legislation doesn't have bankruptcy
wording and that is disappointing to Pelosi. There is no stimulus package either, she said.
These are the standards they put together:
Fairness for American people
She said we have forbearance on for closure to help responsible homeowners stay int their home
Oversight of government
An end to the golden parachute compensation for CEOs
All of that was met with resistance from the administration, she said.
"This bill contains that, in five years on review of initiatives, if there is a shortfall of the $700
billion financial institutions will make up the shortfall not the taxpayers. The taxpayer will be made
whole," Pelosi said.
Still, she questions why no stimulus package.
"Rebuilding the infrastructure of America is important to people all over the world not just America,"
she said.
The $25-30 billion for energy jobs and infrastructure wasn't a Republican consideration.
Pelosi asked for a bi-partisan vote on it since it was a bi-partisan effort.
She said they must come back to readdress various issues, "so don't get settled in with how things are
now."
High interest rates on high-risk loans are more of the problem with the mortgage crisis. These people
weren't being irresponsible but punished for being poor.
People pay their bills when they have the money to do so. Or they may have been paying their bills on
time until a major illness or a job loss. These stories all over the news.
So were calls to re-finance and pull money out of homes.
Banking committee chairman, Barney Frank (D-MA) pleaded with his fellow congressmen and women not to
throw out House Resolution 3997. Frank closed out the debate with Steny Hoyer, D-Maryland Majority
Leader. He, too urged the House to pass the bill. A simple majority was needed.
It was defeated in the House, 205 for, 228 against.
(These numbers may be off by a vote or two, now--does it matter?)
There was no motion to revote, to my understanding.
Republicans overwhelmingly did not support the bill to the tune of 65 yea and nay 133 with one not
voting.
The Democrats voted the opposite with 140 yea and 95 nay--all of them voting. There are more democrats than republicans in the house, I believe the announcer said.
The Dow had dropped 500 points when I turned to CNBC. Is any member of congress watching the Dow plummet?News pundits were debating who did and did not deliver votes.
I became physically ill.
The votes needed to pass the bill: 218.
Maybe some of the votes will flip. Okay, they did not. I have to use the facilities.
H.R. 7175, an amendment improving the lending program was the next vote.
C-SPAN callers were upset and some were glad. One talked about what her grandma said about the Great Depression--peas porridge hot, peas porridge cold and in the pot nine days old.
"I don't want to eat peas porridge nine days old," she said. A caller said she wouldn't vote for a congressman who did not support the legislation. One woman caller said she was worried about a socialistic taint on our democracy and was against the bill.
She was glad, in her own little world, that businesses won't be able to get loans to make payroll. Hmmmm.
Then they voted on minting some commemorative coins celebrating the military.
I must point out that I used to be a reporter. Also, I now completely understand what Barack Obama means by "clarity in government."
school to meet payroll as she has done in the past. She could not do so. This action put everyone who
worked at the school in jeopardy of not having a job. These business scenarios are playing out all across America.
These scenarios are a part of the reason a rescue package is needed, some say. However, the wrong vote or the perceived
wrong vote will cost incumbents their seat on the Hill, newscasters said.
Spenser Bachus a Republican from Alabama said he will take the political risk and vote yes for the
legalisation. He received a round of healthy applause. Many other Republicans heard no such applause.
Many republicans are unwilling to sign on to the legislation.
Republican Congresswoman from Colorado, Marilyn Musgrave, said she doesn't want to vote for a
"bailout" for Wall Street.
Sixth district Minnesota Republican from St. Cloud Hugo, Michelle Bachman, said banks are prohibited
from making loans and that is "why we have a credit crisis."
Apparently, some Republicans are concerned about first tier creditors. In absence of fraud they want
FDIC insurance for them.
D-Illinois Rep. Rahm Emauel said during the 3-hour general debate that unregulated banks are the ones
going under. Banks that are regulated are not, he said.
House flipping a problem.
"Our job is not done until we address the recession on Main Street" he said.
They put out the fire he said but, the remaining days will be spent finding out who started the fire
and put the responsible arsonist in jail" he said.
Dennis Kucinich, D-Ohio, said the legislation will not keep people in their homes. He submitted to
record, expert witness testimony on this issue.
"This bill is about Wall Street."
Republican from Kansas, Rep. Todd Tiahrt said they were being rushed to act under an "artificial
deadline" said fear shouldn't guide decision.
New York Queens Dem. Rep. Gregory Meeks compared the Wall Street financial debacle to a drunk driver
that needs to be rescued.
Markets in the U.S. and world wide had been sliding downwards since their open.
"We have an imperfect product," Ohio Republican, John Boehner said and he doubts it has the votes to
pass. He urged people in the room to think about their friends who will lose jobs and retirees whose
money will dry up.
"This congress has to do its job. No one has come her for this Mud Sandwich. I didn't come here to
vote for bills like this."
He said a vote for the bill will separate boys from men and women from girls.
He urged them to look into their souls. He asked them, on both sides of the isle, to vote for the
imperfect bill. He drew a healthy round of applause.
Speaker of the House Nancy Pelosi (D-San Fransisco) said approving the legislation is a part of the
cost of the Bush failed economic policies. She said the Clinton administration's budget surplus
trajectory was eaten up in two years.
She also said the anything goes mentality is over.
"The party is over in that respect. (The present policies) didn't create jobs or capital but chaos."
She said Ben Bernake is the best known expert on the Great Depression and he said this fiscal crisis
is once in a 100 years.
"It sneaked up on us on little cat feet," she said.
But how?
She said they will continue to work towards that end
She talked about the wide ranging power the original draft held. She said working together in a bi-
partisan way is how they made improvements.
The American people responded almost immediately, she said. The legislation doesn't have bankruptcy
wording and that is disappointing to Pelosi. There is no stimulus package either, she said.
These are the standards they put together:
Fairness for American people
She said we have forbearance on for closure to help responsible homeowners stay int their home
Oversight of government
An end to the golden parachute compensation for CEOs
All of that was met with resistance from the administration, she said.
"This bill contains that, in five years on review of initiatives, if there is a shortfall of the $700
billion financial institutions will make up the shortfall not the taxpayers. The taxpayer will be made
whole," Pelosi said.
Still, she questions why no stimulus package.
"Rebuilding the infrastructure of America is important to people all over the world not just America,"
she said.
The $25-30 billion for energy jobs and infrastructure wasn't a Republican consideration.
Pelosi asked for a bi-partisan vote on it since it was a bi-partisan effort.
She said they must come back to readdress various issues, "so don't get settled in with how things are
now."
High interest rates on high-risk loans are more of the problem with the mortgage crisis. These people
weren't being irresponsible but punished for being poor.
People pay their bills when they have the money to do so. Or they may have been paying their bills on
time until a major illness or a job loss. These stories all over the news.
So were calls to re-finance and pull money out of homes.
Banking committee chairman, Barney Frank (D-MA) pleaded with his fellow congressmen and women not to
throw out House Resolution 3997. Frank closed out the debate with Steny Hoyer, D-Maryland Majority
Leader. He, too urged the House to pass the bill. A simple majority was needed.
It was defeated in the House, 205 for, 228 against.
(These numbers may be off by a vote or two, now--does it matter?)
There was no motion to revote, to my understanding.
Republicans overwhelmingly did not support the bill to the tune of 65 yea and nay 133 with one not
voting.
The Democrats voted the opposite with 140 yea and 95 nay--all of them voting. There are more democrats than republicans in the house, I believe the announcer said.
The Dow had dropped 500 points when I turned to CNBC. Is any member of congress watching the Dow plummet?News pundits were debating who did and did not deliver votes.
I became physically ill.
The votes needed to pass the bill: 218.
Maybe some of the votes will flip. Okay, they did not. I have to use the facilities.
H.R. 7175, an amendment improving the lending program was the next vote.
C-SPAN callers were upset and some were glad. One talked about what her grandma said about the Great Depression--peas porridge hot, peas porridge cold and in the pot nine days old.
"I don't want to eat peas porridge nine days old," she said. A caller said she wouldn't vote for a congressman who did not support the legislation. One woman caller said she was worried about a socialistic taint on our democracy and was against the bill.
She was glad, in her own little world, that businesses won't be able to get loans to make payroll. Hmmmm.
Then they voted on minting some commemorative coins celebrating the military.
I must point out that I used to be a reporter. Also, I now completely understand what Barack Obama means by "clarity in government."
House Resolution 3997
As it stands house republicans have/had a handfull of hold-outs on the signing of this legislation.
I gleened this information from GOP.gov September 29, hoping to find out what exactly is the point or points of contention within the GOP.
bills being considered
H.R. 3997
H.R. 7201
S. 3598
S. 2840
S. 3296
S. 3597
H.R. 7175
S. 3536
S. 431
S. 3606
H.R. 7084
S. 2816
S. 3569
H.R. 6838
H.R. 5571
H.R. 6707
S. 2304
H.Res. 875
H.Res. 1429
H.R. 6460
bill
H.R. 3997 (vote due this afternoon)
Emergency Economic Stabilization Act of 2008
FLOOR SITUATION
H.R. 3997 is expected to be considered on the floor of the House on September 29, 2008.
This legislation is being considered on the floor under a closed rule. The rule:
Ø Provides for consideration of the Senate amendment to the House amendment to the Senate amendment to H.R. 3997.
Ø Makes in order a motion by the chairman of the Committee on Financial Services or his designee to concur in the Senate amendment to the House amendment with the amendment printed in the report of the Committee on Rules accompanying the resolution.
Ø Waives all points of order against the motion.
Ø Provides that the Senate amendment and the motion shall be considered as read.
Ø Provides three hours of debate on the motion equally divided and controlled by the chairman and ranking member of the Committee on Financial Services.
Ø Provides that during consideration of the motion to concur, notwithstanding the operation of the previous question, the Chair may postpone further consideration of such motion to a time designated by the Speaker.
BACKGROUND
On September 7, 2008, Secretary Henry Paulson announced that the U.S. Treasury in cooperation with the Federal Reserve would be taking over control of Fannie Mae and Freddie Mac. Fannie Mae and Freddie Mac own or guarantee $5.2 trillion of mortgages in the United States. As a secondary mortgage operator, Fannie and Freddie must have enough funds available to pay their investors, which include state and local governments, regional banks, and foreign governments.
Using the authority given to the Treasury when Congress passed the Housing and Economic Recovery Act (H.R. 3221) in July, the Secretary implemented a plan to try to increase stability in the housing and financial markets. The plan allows Treasury to enter into a Senior Preferred Stock Agreement with each of the GSEs, to purchase mortgage backed securities (MBS) from the GSEs on the open market, and the Federal Reserve Bank of New York act as a credit lending facility for the GSEs. The government takeover of Fannie and Freddie Mac was followed shortly thereafter by a government rescue of AIG, in which the U.S. provided a $85 billion loan.
On September 19, 2008, Secretary Paulson, Chairman of the Federal Reserve Ben Bernanke, and the Chairman of the Securities and Exchange Commission Christopher Cox announced that further action was needed to stabilize the markets and that they had begun talks for a comprehensive approach to relieving the stress on our nation’s financial institutions and markets. The following day the Administration submitted a $700 billion legislative proposal to Congress that would have given Treasury the authority to purchase distressed assets from these troubled financial institutions.
After days of bicameral, bipartisan negotiations, leaders from both parties reached a tentative agreement on the outline of the bill. The final text was available late in the day on Sunday, September 28, 2008.
SUMMARY
The purpose of this bill is to provide the Secretary of the Treasury with the authority to restore liquidity and stability to the American financial system. Important provisions of this legislation are described below.
Note: This bill does not include several contentious provisions due to successful Republican negotiation. The following items are not included in this legislation:
Ø “Say on pay” proxy access which would give unions a nonbinding shareholder vote on the boards of companies in which the Treasury Department buys a direct stake in assets.
Ø Affordable housing slush fund which would bankroll organizations like the Association of Community Organizations for Reform Now (ACORN)at taxpayer expense.
Ø “Cramdown” provisions allowing bankruptcy judges to reduce mortgage principal, thus fueling a bonanza for trial lawyers.
TITLE I – TROUBLED ASSETS RELIEF PROGRAM (TARP)
Purchase of Troubled Assets: The bill authorizes the creation of a troubled assets relief program within the Department of Treasury to purchase troubled asses from financial institutions. In carrying out this program, the Treasury must consult with the Federal Reserve Board of Governors, the Federal Reserve Bank of New York, the Federal Deposit Insurance Corporation, the Comptroller of the Currency, the Office of Thrift Supervision, and the Secretary of Housing and Urban Development. The Treasury Secretary is required to establish guidelines and policies to carry out this program. This authority will terminate on December 31, 2009, but may be extended by the Secretary for another year upon certification to Congress.
Insurance of Troubled Assets: The bill requires the Treasury Department to establish an insurance program that guarantees against losses to mortgage-backed securities (MBS) issued or originated prior to March 18, 2008. The bill directs the Treasury to assess risk-based premiums on MBS to finance this insurance. The insurance program will sunset within 2 years.Holders of MBS must pay a premium to have a government guarantee, rather than be bought by Treasury. This plan will directly reduce the $700 billion dollar taxpayer liability. Every dollar used to insure assets reduces the need to spend taxpayer money to purchase MBS.
Financial Stability Oversight Board: The bill establishes the Financial Stability Oversight Board to review the authorities of this Act, make recommendations to the Secretary, and report on fraud to the Inspector General of the Treasury or the Attorney General. The Board will include the Chairman of the Federal Reserve, the Secretary of the Treasury, and the chairman of the Securities and Exchange Commission.
Reports: This legislation requires the Secretary to report to Congress on certain issues. These reports include the actions taken by the Secretary under the Act, a detailed financial statement, and a description of all transactions made for every $50 billion in assets purchased. The Secretary also will submit a report to Congress by April 30, 2009, on the current state of the financial markets.
Mark-to-Market: The bill restates the Securities and Exchange Commission’s (SEC) authority to suspend mark-to-market accounting regulations. The SEC must conduct a study on mark-to-market accounting standards and report to Congress with findings within 90 days.
Rights and Management: The Secretary may exercise authorities under this Act at any time. The legislation enables the Secretary to manage the assets and requires that profits from the sale of troubled assets to be used to pay down the national debt. The Secretary may determine the terms and conditions of the sale of these assets. The Federal Deposit Insurance Corporation (FDIC) is allowed to manage assets for residential mortgage loans and mortgage-backed securities.
Conflicts of Interest: The Secretary must issue regulations to manage or prohibit conflicts of interest in the administration of the program.
Foreclosures: The Secretary must implement a plan to mitigate foreclosures, and may use loan guarantees and credit enhancement to avoid foreclosures. Federal entities which hold mortgages and mortgage-backed securities must develop plans to minimize foreclosures. Such agencies will also work to encourage loan modifications, considering value to the taxpayer. Loan modifications cannot result in a loss to taxpayers.
Executive Compensation & Corporate Governance: In the event of total government takeovers there will be no “golden parachutes” or severance pay for company executives. For companies whose assets Treasury purchases at auction at a level over $300 million, there is a total ban on golden parachutes and a tax deduction limit on executive compensation above $500,000, for CEO, CFO, and the three next-highest paid officers.
Warrants: Under this provision, Treasury will receive non-voting warrants from companies participating in TARP. The bill establishes a de minimus asset threshold of $100 million for warrants. Warrants are certificates entitling the holder to buy securities at a specific price.
Market Transparency: The Secretary must disclose details of any transaction within two business days.
Graduated Purchase Authorization: This legislation immediately authorizes the Secretary to use up to $250 billion for TARP. An additional $100 billion is available to the Secretary if the President certifies to Congress that is necessary, and a final $350 billion is authorized if the President reports to Congress requesting the additional funding, unless Congress passes a joint resolution of disapproval (which will have fast track consideration). This authority will terminate on December 31, 2009, but may be extended by the Secretary for another year upon certification to Congress.
Oversight and Auditing: The Comptroller General will conduct ongoing review of TARP activities and report to Congress. An annual audit of TARP is required of the Comptroller General.
Judicial Review: The legislation bars injunctive or other forms of equitable relief against the Secretary regarding the purchase or sale of assets, the insurance of assets, and forfeiture mitigation efforts, unless meant to remedy a violation of the Constitution. Except as limited above, this bill provides for judicial review of the Secretary’s final actions and requires the challenger to prove that the Secretary’s actions were arbitrary, capricious, an abuse of discretion, or not in accordance with the law.
Special Inspector General: The bill creates a Special Inspector General for TARP who must report to Congress quarterly.
Public Debt Statutory Limit: The debt ceiling is raised from $10 trillion to $11.3 trillion.
Congressional Oversight: The bill establishes a Congressional bipartisan oversight commission, with members appointed evenly by the majority and minority. The panel will report to Congress every month on regulatory reform through January 20, 2009.
Recoupment of Funds: The President must submit a proposal to Congress within five years on how to recoup funds from the financial industry for any taxpayer losses.
TITLE II – BUDGET RELATED PROVISIONS
Information for Congressional Support Agencies: The Secretary must make available, upon request of congressional support agencies, all information used in connection with activities authorized by this legislation.
OMB Reports: The bill requires the Office of Management and Budget (OMB) to report to the President and Congress an estimate of the cost of the troubled assets and guarantees of the troubled assets, as well as the information used to derive the estimate within 60 days of the exercise of authority. After the first report, OMB must report this information semiannually to Congress and provide a detailed analysis of how the estimate has changed from the previous report.
CBO Reports: The bill requires the Congressional Budget Office (CBO) to submit an assessment of the OMB report to Congress within 45 days of receipt. The assessment must include the cost of the troubled assets and guarantees of the troubled assets, the information and valuation methods used to calculate such cost, and the impact on the deficit and the debt.
Analysis in the President’s Budget: The bill requires that the President to include analysis and estimates relating to the costs of the actions taken by the Secretary using any authority provided by this legislation as a part of each fiscal years Budget request.
TITLE III – TAX PROVISIONS
Gain or Loss from Sale or Exchange of Certain Preferred Stock: The bill allows for the gain or loss from the sale or exchange of preferred stock in Fannie Mae and Freddie Mac to be treated as ordinary income or loss. This provision helps local community banks across the country by allowing them to write off losses on Fannie and Freddie mortgage assets they hold.
Special Rules for Tax Treatment of Executive Compensation: Any company directly selling assets to Treasury would have its executive compensation subject to Treasury’s approval so long as Treasury has an equity stake in the company. The provision does not allow employers participating in the troubled assets relief program for any company selling at least $300 million of assets as part of the auction process to deduct executive remuneration that exceeds $500,000.
Exclusion of Income from Discharge of Qualified Principal Residence Indebtedness: The bill extends current law tax forgiveness on the cancellation of mortgage debt.
ADDITIONAL INFORMATION
According to a letter sent from OMB Director Jim Nussle to Republican Leader John Boehner on September 28, 2008, “the legislation authorizes a purchase program that allows the federal government to hold up to $700 billion in mortgages or mortgage-backed securities, and creates a program to allow federal guarantees as an alternative to direct purchases. The $700 billion figure is substantial, of course, but the size of the problem in our financial markets requires a commitment of this size. For several reasons, however, the impact on the taxpayer will be considerably less than $700 billion.” (Nussle Letter)
COST ESTIMATE
According to the Congressional Budget Office, “Although it is not currently possible to quantify the net budget impact given the lack of details about how the program would be implemented, CBO has concluded that enacting the bill would likely entail some net budget cost—which would, however, be substantially smaller than $700 billion.” (CBO Cost Estimate)
I gleened this information from GOP.gov September 29, hoping to find out what exactly is the point or points of contention within the GOP.
bills being considered
H.R. 3997
H.R. 7201
S. 3598
S. 2840
S. 3296
S. 3597
H.R. 7175
S. 3536
S. 431
S. 3606
H.R. 7084
S. 2816
S. 3569
H.R. 6838
H.R. 5571
H.R. 6707
S. 2304
H.Res. 875
H.Res. 1429
H.R. 6460
bill
H.R. 3997 (vote due this afternoon)
Emergency Economic Stabilization Act of 2008
FLOOR SITUATION
H.R. 3997 is expected to be considered on the floor of the House on September 29, 2008.
This legislation is being considered on the floor under a closed rule. The rule:
Ø Provides for consideration of the Senate amendment to the House amendment to the Senate amendment to H.R. 3997.
Ø Makes in order a motion by the chairman of the Committee on Financial Services or his designee to concur in the Senate amendment to the House amendment with the amendment printed in the report of the Committee on Rules accompanying the resolution.
Ø Waives all points of order against the motion.
Ø Provides that the Senate amendment and the motion shall be considered as read.
Ø Provides three hours of debate on the motion equally divided and controlled by the chairman and ranking member of the Committee on Financial Services.
Ø Provides that during consideration of the motion to concur, notwithstanding the operation of the previous question, the Chair may postpone further consideration of such motion to a time designated by the Speaker.
BACKGROUND
On September 7, 2008, Secretary Henry Paulson announced that the U.S. Treasury in cooperation with the Federal Reserve would be taking over control of Fannie Mae and Freddie Mac. Fannie Mae and Freddie Mac own or guarantee $5.2 trillion of mortgages in the United States. As a secondary mortgage operator, Fannie and Freddie must have enough funds available to pay their investors, which include state and local governments, regional banks, and foreign governments.
Using the authority given to the Treasury when Congress passed the Housing and Economic Recovery Act (H.R. 3221) in July, the Secretary implemented a plan to try to increase stability in the housing and financial markets. The plan allows Treasury to enter into a Senior Preferred Stock Agreement with each of the GSEs, to purchase mortgage backed securities (MBS) from the GSEs on the open market, and the Federal Reserve Bank of New York act as a credit lending facility for the GSEs. The government takeover of Fannie and Freddie Mac was followed shortly thereafter by a government rescue of AIG, in which the U.S. provided a $85 billion loan.
On September 19, 2008, Secretary Paulson, Chairman of the Federal Reserve Ben Bernanke, and the Chairman of the Securities and Exchange Commission Christopher Cox announced that further action was needed to stabilize the markets and that they had begun talks for a comprehensive approach to relieving the stress on our nation’s financial institutions and markets. The following day the Administration submitted a $700 billion legislative proposal to Congress that would have given Treasury the authority to purchase distressed assets from these troubled financial institutions.
After days of bicameral, bipartisan negotiations, leaders from both parties reached a tentative agreement on the outline of the bill. The final text was available late in the day on Sunday, September 28, 2008.
SUMMARY
The purpose of this bill is to provide the Secretary of the Treasury with the authority to restore liquidity and stability to the American financial system. Important provisions of this legislation are described below.
Note: This bill does not include several contentious provisions due to successful Republican negotiation. The following items are not included in this legislation:
Ø “Say on pay” proxy access which would give unions a nonbinding shareholder vote on the boards of companies in which the Treasury Department buys a direct stake in assets.
Ø Affordable housing slush fund which would bankroll organizations like the Association of Community Organizations for Reform Now (ACORN)at taxpayer expense.
Ø “Cramdown” provisions allowing bankruptcy judges to reduce mortgage principal, thus fueling a bonanza for trial lawyers.
TITLE I – TROUBLED ASSETS RELIEF PROGRAM (TARP)
Purchase of Troubled Assets: The bill authorizes the creation of a troubled assets relief program within the Department of Treasury to purchase troubled asses from financial institutions. In carrying out this program, the Treasury must consult with the Federal Reserve Board of Governors, the Federal Reserve Bank of New York, the Federal Deposit Insurance Corporation, the Comptroller of the Currency, the Office of Thrift Supervision, and the Secretary of Housing and Urban Development. The Treasury Secretary is required to establish guidelines and policies to carry out this program. This authority will terminate on December 31, 2009, but may be extended by the Secretary for another year upon certification to Congress.
Insurance of Troubled Assets: The bill requires the Treasury Department to establish an insurance program that guarantees against losses to mortgage-backed securities (MBS) issued or originated prior to March 18, 2008. The bill directs the Treasury to assess risk-based premiums on MBS to finance this insurance. The insurance program will sunset within 2 years.Holders of MBS must pay a premium to have a government guarantee, rather than be bought by Treasury. This plan will directly reduce the $700 billion dollar taxpayer liability. Every dollar used to insure assets reduces the need to spend taxpayer money to purchase MBS.
Financial Stability Oversight Board: The bill establishes the Financial Stability Oversight Board to review the authorities of this Act, make recommendations to the Secretary, and report on fraud to the Inspector General of the Treasury or the Attorney General. The Board will include the Chairman of the Federal Reserve, the Secretary of the Treasury, and the chairman of the Securities and Exchange Commission.
Reports: This legislation requires the Secretary to report to Congress on certain issues. These reports include the actions taken by the Secretary under the Act, a detailed financial statement, and a description of all transactions made for every $50 billion in assets purchased. The Secretary also will submit a report to Congress by April 30, 2009, on the current state of the financial markets.
Mark-to-Market: The bill restates the Securities and Exchange Commission’s (SEC) authority to suspend mark-to-market accounting regulations. The SEC must conduct a study on mark-to-market accounting standards and report to Congress with findings within 90 days.
Rights and Management: The Secretary may exercise authorities under this Act at any time. The legislation enables the Secretary to manage the assets and requires that profits from the sale of troubled assets to be used to pay down the national debt. The Secretary may determine the terms and conditions of the sale of these assets. The Federal Deposit Insurance Corporation (FDIC) is allowed to manage assets for residential mortgage loans and mortgage-backed securities.
Conflicts of Interest: The Secretary must issue regulations to manage or prohibit conflicts of interest in the administration of the program.
Foreclosures: The Secretary must implement a plan to mitigate foreclosures, and may use loan guarantees and credit enhancement to avoid foreclosures. Federal entities which hold mortgages and mortgage-backed securities must develop plans to minimize foreclosures. Such agencies will also work to encourage loan modifications, considering value to the taxpayer. Loan modifications cannot result in a loss to taxpayers.
Executive Compensation & Corporate Governance: In the event of total government takeovers there will be no “golden parachutes” or severance pay for company executives. For companies whose assets Treasury purchases at auction at a level over $300 million, there is a total ban on golden parachutes and a tax deduction limit on executive compensation above $500,000, for CEO, CFO, and the three next-highest paid officers.
Warrants: Under this provision, Treasury will receive non-voting warrants from companies participating in TARP. The bill establishes a de minimus asset threshold of $100 million for warrants. Warrants are certificates entitling the holder to buy securities at a specific price.
Market Transparency: The Secretary must disclose details of any transaction within two business days.
Graduated Purchase Authorization: This legislation immediately authorizes the Secretary to use up to $250 billion for TARP. An additional $100 billion is available to the Secretary if the President certifies to Congress that is necessary, and a final $350 billion is authorized if the President reports to Congress requesting the additional funding, unless Congress passes a joint resolution of disapproval (which will have fast track consideration). This authority will terminate on December 31, 2009, but may be extended by the Secretary for another year upon certification to Congress.
Oversight and Auditing: The Comptroller General will conduct ongoing review of TARP activities and report to Congress. An annual audit of TARP is required of the Comptroller General.
Judicial Review: The legislation bars injunctive or other forms of equitable relief against the Secretary regarding the purchase or sale of assets, the insurance of assets, and forfeiture mitigation efforts, unless meant to remedy a violation of the Constitution. Except as limited above, this bill provides for judicial review of the Secretary’s final actions and requires the challenger to prove that the Secretary’s actions were arbitrary, capricious, an abuse of discretion, or not in accordance with the law.
Special Inspector General: The bill creates a Special Inspector General for TARP who must report to Congress quarterly.
Public Debt Statutory Limit: The debt ceiling is raised from $10 trillion to $11.3 trillion.
Congressional Oversight: The bill establishes a Congressional bipartisan oversight commission, with members appointed evenly by the majority and minority. The panel will report to Congress every month on regulatory reform through January 20, 2009.
Recoupment of Funds: The President must submit a proposal to Congress within five years on how to recoup funds from the financial industry for any taxpayer losses.
TITLE II – BUDGET RELATED PROVISIONS
Information for Congressional Support Agencies: The Secretary must make available, upon request of congressional support agencies, all information used in connection with activities authorized by this legislation.
OMB Reports: The bill requires the Office of Management and Budget (OMB) to report to the President and Congress an estimate of the cost of the troubled assets and guarantees of the troubled assets, as well as the information used to derive the estimate within 60 days of the exercise of authority. After the first report, OMB must report this information semiannually to Congress and provide a detailed analysis of how the estimate has changed from the previous report.
CBO Reports: The bill requires the Congressional Budget Office (CBO) to submit an assessment of the OMB report to Congress within 45 days of receipt. The assessment must include the cost of the troubled assets and guarantees of the troubled assets, the information and valuation methods used to calculate such cost, and the impact on the deficit and the debt.
Analysis in the President’s Budget: The bill requires that the President to include analysis and estimates relating to the costs of the actions taken by the Secretary using any authority provided by this legislation as a part of each fiscal years Budget request.
TITLE III – TAX PROVISIONS
Gain or Loss from Sale or Exchange of Certain Preferred Stock: The bill allows for the gain or loss from the sale or exchange of preferred stock in Fannie Mae and Freddie Mac to be treated as ordinary income or loss. This provision helps local community banks across the country by allowing them to write off losses on Fannie and Freddie mortgage assets they hold.
Special Rules for Tax Treatment of Executive Compensation: Any company directly selling assets to Treasury would have its executive compensation subject to Treasury’s approval so long as Treasury has an equity stake in the company. The provision does not allow employers participating in the troubled assets relief program for any company selling at least $300 million of assets as part of the auction process to deduct executive remuneration that exceeds $500,000.
Exclusion of Income from Discharge of Qualified Principal Residence Indebtedness: The bill extends current law tax forgiveness on the cancellation of mortgage debt.
ADDITIONAL INFORMATION
According to a letter sent from OMB Director Jim Nussle to Republican Leader John Boehner on September 28, 2008, “the legislation authorizes a purchase program that allows the federal government to hold up to $700 billion in mortgages or mortgage-backed securities, and creates a program to allow federal guarantees as an alternative to direct purchases. The $700 billion figure is substantial, of course, but the size of the problem in our financial markets requires a commitment of this size. For several reasons, however, the impact on the taxpayer will be considerably less than $700 billion.” (Nussle Letter)
COST ESTIMATE
According to the Congressional Budget Office, “Although it is not currently possible to quantify the net budget impact given the lack of details about how the program would be implemented, CBO has concluded that enacting the bill would likely entail some net budget cost—which would, however, be substantially smaller than $700 billion.” (CBO Cost Estimate)
"State of the Black World" conference to set Black agenda
Since unemployement numbers have hit double digits for the first time in three years, Black community activists will gather in New Orleans, Nov. 19 to discuss the state of the "Black world."
read more | digg story
read more | digg story
Sunday, September 28, 2008
Legendary Actor Paul Newman dies at 83
He was indeed a legend and not just as a Hollywood star, but as a humanitarian & philanthropist. He used his stardom to create a popular food brand that donated all of its profits to charity! His brand has become the model for smart use of markets and celebrity status to raise funds for worthy causes.
read more | digg story
read more | digg story
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