So, we have been talking on US Meltdown for long... Firstly the Subprime crisis ,the Lehman;s fall and now the BAIL OUT PLAN...
Kindly go thru the post to understand , what exactly BAIL OUT PLAN IS ALL ABOUT
Finally the US Congress and the Bush administration have finally agreed on the language of the $700 billion legislation intended to bail out institutions reeling under the massive financial crisis after a marathon session stretching several hours.
Though the government and lawmakers have agreed on the broad outlines of legislation after sitting through the package late Sunday night, with lawmakers refusing to give the entire $700 billion to the Treasury at one go. The $700 billion, however, will not be given to the Treasury in one go to bail out the troubled financial institutions and the distribution of money will come about in three stages, the first of which will be in the magnitude of $250 billion followed by a tranche of $100 billion and finally of $350 billion.
There are at least four separate and independent oversight entities that are a part of the package: an oversight board appointed by leaders of Congress on a bipartisan basis; a general accounting office presence at the Treasury to oversee the programme and conduct audits; an independent Inspector General; and Transparency including the postings of transactions online.
The US Congress and the Bush administration have finally agreed on the language of the $700 billion legislation intended to bail out institutions reeling under the massive financial crisis after a marathon session stretching several hours.
The following is the summary of the 'Emergency Economic Stabilization Act of 2008,' also called the bailout plan.
I. Stabilizing the Economy
The Emergency Economic Stabilization Act of 2008 (EESA) provides up to $700 billion to the Secretary of the Treasury to buy mortgages and other assets that are clogging the balance sheets of financial institutions and making it difficult for working families, small businesses, and other companies to access credit, which is vital to a strong and stable economy. EESA also establishes a program that would allow companies to insure their troubled assets.
II. Homeownership Preservation
EESA requires the Treasury to modify troubled loans -- many the result of predatory lending practices -- wherever possible to help American families keep their homes. It also directs other federal agencies to modify loans that they own or control. Finally, it improves the HOPE for Homeowners program by expanding eligibility and increasing the tools available to the Department of Housing and Urban Development to help more families keep their homes.
III. Taxpayer Protection
Taxpayers should not be expected to pay for Wall Street's mistakes. The legislation requires companies that sell some of their bad assets to the government to provide warrants so that taxpayers will benefit from any future growth these companies may experience as a result of participation in this program. The legislation also requires the President to submit legislation that would cover any losses to taxpayers resulting from this program from financial institutions.
IV. No Windfalls for Executives
Executives who made bad decisions should not be allowed to dump their bad assets on the government, and then walk away with millions of dollars in bonuses. In order to participate in this program, companies will lose certain tax benefits and, in some cases, must limit executive pay. In addition, the bill limits "golden parachutes" and requires that unearned bonuses be returned.
V. Strong Oversight
Rather than giving the Treasury all the funds at once, the legislation gives the Treasury $250 billion immediately, then requires the President to certify that additional funds are needed ($100 billion, then $350 billion subject to Congressional disapproval). The Treasury must report on the use of the funds and the progress in addressing the crisis.
EESA also establishes an Oversight Board so that the Treasury cannot act in an arbitrary manner. It also establishes a special inspector general to protect against waste, fraud and abuse.
Will US Bail out plan work???
Have ur say in the comments!!!