Does the Bailout Ignore Homeowners, Execs?
The final bill has weaker help for homeowners and lax limits on executive pay.
Sept. 29, 2008 — -- The compromise financial industry bailout bill -- like most things out of Washington -- has a little bit of everything for all parties but also falls short of what some had hoped to get out of the bill.
Nobody seems in love with it, but leaders from both parties called its passage essential to get the U.S. economy back on track.
There are limits to executive pay and requirements to help homeowners struggling with their mortgages, but neither of those sections of the bill are as strong as originally proposed.
"It's not a bill that any one of us would have written. It's a much better bill than we got. It's not as good as it should be," Rep. Barney Frank, D-Mass., the House Financial Services Committee chairman, said Sunday night.
CLICK HERE for the full text of the bailout legislation in PDF form.
"This agreement, while not perfect, will help stabilize the economy," added Senate Majority Leader Harry Reid during the same news conference.
The main thrust of the bill, called the Emergency Economic Stabilization Act of 2008, gives the Treasury Department $250 billion to immediately start buying up troubled assets -- such as mortgages -- from banks and other financial institutions. The president can spend an additional $100 billion if needed, and a final $350 billion is available unless Congress votes not to spend it.
Republicans also added in a provision to create a program that allows banks to buy government insurance to back their existing investments, rather than selling them outright to the government.
It's a way to protect any ultimate losses for the banks' current investments, and it's what Wall Street wanted.
President Bush said this morning that this is a "bold bill that will help keep the crisis in our financial system from spreading throughout our economy."
"Every member of Congress and every American should keep in mind. A vote for this bill is a vote to prevent economic damage to you and your community," Bush said.
But Americans might be disappointed by a couple provisions. Main Street had called for limits on how many millions of dollars Wall Street executives could be paid and asked for help for homeowners struggling to pay their mortgages. The bill falls short of original expectations in both areas.
