Troubled Asset Relief Provision (TARP) of 2008
Welfare for Wall Street? Not really but the latest compromise on the $700 BILLION bailout is finally out for the public to see. The legislation is still being negotiated and elements of the bill could still change as shown in by the brackets "[ ]" in the document. The House is expected to vote tomorrow and the Senate no later than Wednesday.Among the provisions of the draft bill:
- The $700 billion would be disbursed in stages, with $250 billion made available immediately for the Treasury's use.
- Curbs will be placed on the compensation of executives at companies that sell mortgage assets to Treasury. Among them, the bill would limit golden parachutes to executives at companies that participate; they will not be able to deduct the salary they pay to executives above $500,000.
- 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.
- Allow for the Treasury to receive the option to take ownership stakes in participating companies under certain circumstances.
- 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 18, 2008.
Some say do not bet on a bailout payday!The financial market reaction on Monday will be interesting in Asia, Europe and in the United States. So far the markets in the US have been hyperventilating, up and down that it is. Those brave souls engaged in day-trading have made a good buck if they read their tea leaves correctly (yeah for me and Fannie Mae) but it has been trying times for all investors.You can read the tentative bailout agreement here. Additional information here.
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