The following are provisions (numbered below) of the draft bailout bill as reported by CNNMoney.com. The points I raise and questions I ask (the bullets below each of the numbered provisions) need to be fully understood before we taxpayers agree to anything involving a bailout.
1. The $700 billion would be disbursed in stages, with $250 billion made available immediately for the Treasury's use.
Ø What? Is $700 Billion needed or not?
Ø Why is $250 Billion needed; why not $50 Billion, or $350 Billion?
2. Curbs will be placed on the compensation of executives at companies that sell mortgage assets to Treasury. Among them, companies that participate will not be able to deduct the salary they pay to executives above $500,000.
Ø This has nothing to do with “Golden Parachutes.
Ø Salaries are only components of total compensation of active employees.
Ø A golden parachute is only activated when a senior executive leaves the company – usually under any circumstances. The issue regarding “Golden Parachutes” relative to the bailed out companies is focused on the people in those companies who created this crisis!!!
Ø No company should receive taxpayer bail-out money if the executives who created this crisis have already left with Golden Parachutes, or deduct that amount from the bail-out.
Ø If a company takes taxpayer money and the company pays the taxpayers back (with in five years – see #6 below), then the executive compensation is once again the purview of the stockholders and board of directors.
3. An oversight board will be created. The board will include the Federal Reserve chairman, the Securities and Exchange Commission chairman, the Federal Home Finance Agency director and the Housing and Urban Development secretary.
Ø Define oversight.
Ø Government (politics) was instrumental in this happening in the first place, I therefore want to know how oversight is going to benefit me.
4. Treasury is allowed the option to take ownership stakes in participating companies under certain circumstances.
Ø What circumstances?
Ø For what purpose?
5. Treasury may establish an insurance program - with risk-based premiums paid by the industry - to guarantee companies' troubled assets, including mortgage-backed securities, purchased before March 14, 2008.
Ø how does this achieve the financial outcome that is needed?
6. One provision requires the president to propose legislation to recoup losses from the financial industry if the rescue plan results in net losses to taxpayers five years after the plan is enacted.
Ø Get real; in 5 years are we actually going to put these same companies in the same predicament they are in today because the taxpayers haven’t recouped losses resulting from the rescue plan?
Ø Congress is treating taxpayers like we’re idiots – the United States is not going to create financial debacle part 2, regardless of returns – PERIOD! The US government is simply going to bail them out further.