New Senate Bailout Bill
If you wonder what is in the bill the Senate plans to vote on tonight, here is a current draft. It is 451 pages, but the vast majority of it relates to tax relief extender provisions tacked on to the bill. The Paulson provisions take the first 112 pages of it.
Some notable changes from the failed House bill:
1. The Senate bill says the SEC “shall have the authority . . . to suspend, by rule, regulation, or order, the application of Statement Number 157 of the Financial Accounting Standards Board [mark-to-market rules] for any issuer . . . or with respect to any class or category of transaction if the Commission determines that is necessary or appropriate in the public interest and is consistent with the protection of investors.”
2. The bill does have a temporary increase in the deposit insurance limits to $250K. There would not be any increase in FDIC fees for this extra insurance.
3. The bill bans any future guarantee of money market funds using the exchange stabilization fund.
The bill still gives Treasury the authority to buy all these assets, but there appears to be no provision for Treasury to just issue loans against the collateral for the same low price. How on earth would Treasury service the assets or monitor them? I guess it will hire a lot of contractors, and one can only imagine how badly that might turn out.
