There are various plans being circulated right now by Hill Democrats, laying out alternative frameworks for a Wall Street bailout.
We just obtained one from Rep. Brad Sherman (D-CA), a member of the House Financial Services Committee. According to Sherman’s press secretary, the congressman just presented this proposal at a meeting with other members.
Sherman’s plan covers all of the major points that Democrats have been insisting on — strong Congressional oversight of any agreement, limits on executive pay, protection for homeowners. It also adds some more provisions, including an economic stimulus, and a measure to make it easier and quicker for Congress to enact future corporate governance reform.
This morning, Rep. Sherman told The Hill, referring to the Bush administration’s bailout proposal: “This is a bill for Wall Street, not a bill for Main Street.”
He added: “Wall Street and the administration are going all out to tell constituents, ‘Make your congressman vote for our bill, or your 401(k) [retirement plan] is toast.’ ”
Sherman’s complete proposal follows after the jump…Discussion Points on Bailout Plan
1) Supervision. The Secretary of the Treasury shall not enter into
any contracts or purchase agreements unless such contract or purchase
agreement is approved by a bipartisan three member Board. Before we
pass the bill, Bush must unequivocally agree to appoint one person
selected by the Speaker and one selected by the Senate Majority Leader
to the Board. Asset purchase agreements of less than $1 billion and
service contracts providing for fees of less than $10 million are exempt
from this requirement.
2) Fast track for Regulatory & Corporate Governance Reform.
Throughout the 111th Congress, the Speaker of the House of
Representatives and the Majority Leader of the United States Senate,
shall have the following extraordinary power: to call up any bill
dealing with corporate governance and/or financial services reform under
the following rules: the bill shall be subject to limited debate,
followed by an up or down vote.
3) Tough Standards on Executive Compensation. Upon the sale of any
mortgage related asset to the United States Treasury by any corporation,
the following shall be applicable: any executive compensation contract
calling for compensation in excess of the amounts which are deductible
under Internal Revenue Code Section 162(m), is hereby void as against
public policy. No executive compensation agreement or practice shall be
engaged in by the selling entity, providing for compensation that is not
deductible under Internal Revenue Code 162(m). This provision is
applicable to the entity selling a mortgage related assets to the
Treasury and all affiliates of such entity. Affiliates is as defined in
Internal Revenue Code Section 1504.
4) US Investors Only: No mortgage related asset shall be purchased
under the bill unless it is established that such asset was owned on
September 20th, 2008, by an entity headquartered in the United States.
5) Obligation to invest in the United States. Any entity selling
assets under this bill to the United States must agree to invest the
proceeds of such sale in the United States for no less than 5 years.
6) Homeowner States Rights Not Preempted. The federal government
in its role as holder of any mortgage, shall have no greater rights via
the mortgagor than would a private entity owning said mortgage. The
federal government shall comply with all state and local laws which
protect such mortgagor, not withstanding any argument that the federal
government is exempt therefrom.
7) Reports to Congress. The reports to Congress required by
Section 4 of the Paulson Act shall be rendered every 2 weeks, for so
long as said act is effective.
8) Minority and small business contractors Buy American. At least
10% of the asset (in dollar volume) management contracts and advisor
contracts must be small enough that a firm of 100 or fewer staff could
perform the contract. Otherwise, minority and small business will be
effectively excluded. In contracting with private entities for services
regarding the acquisition and management of mortgage related assets, the
Secretary of the Treasury shall be bound by all applicable laws designed
to benefit minority-owned businesses, women-owned businesses, and small
businesses and shall be bound by all applicable “Buy American”
9) Review. Section 8 of Secretary Paulson’s proposal is deleted.
The actions by the Secretary shall be reviewable by administrative
agencies and courts of law as provided by existing law.
10) Homeowner protection/bankruptcy reform.
11) Economic Stimulus.
Late Update: Sen. Chris Dodd’s proposal, which would give
the U.S. Treasury an equity stake when it helps companies burdened by debt, is here.