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Perot Releases “Main Street” Bailout plan

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While the US congress debates ways to slip out of town after delivering Hank Paulson his demands, others continue to put forth actual workable ideas. I just got an email from the Ross Perot people detaing a different approach.

Some good stuff in here (and some bad) and it would cost us NOTHING!

http://perotcharts.com/2008/09…

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The Main Street Rescue Plan

Congress will be voting on a revised Wall Street Bailout Plan as early as October 1, 2008. If you believe that Congress should be focusing on Main Street first, then please click here to send an email to your elected officials telling them you don’t want the government spending billions of dollars on bad loans.

Phase One – Immediate Action by U.S. Congress

1. Securities and Exchange Commission

Mandate that the SEC:

Suspend its “mark-to-market” accounting regulations that are causing the write-down of bank assets to fire-sale prices, and thereby contracting the supply of available investment capital.

Tightly restrict short sales of financial stocks.

2. Federal Deposit Insurance Corporation

Mandate that the FDIC:

Declare a national emergency during which time the FDIC will back depositors and general creditors of banks that fail and resolve those collapses in a way that does not cost depositors, such as selling deposits and loans of the failed institution to another institution.

Reconstitute the FDIC’s “net worth certificate” (NWC) program that Congress created in the 1980s for the savings and loan crisis of that era. The NWC required no federal subsidy or cash outlay. Under the NWC, the FDIC bought subordinated debentures in the bank and issued FDIC notes to the bank, with the interest being the exact same on both instruments. Under this program, the FDIC assesses the financial condition of banks and shores up weak ones that can survive if given time to resolve their problems and merges/liquidates those too weak for the NWC program. Under the NWC program, the FDIC will provide strict supervision of participating banks, including the employment of key personnel and their compensation, until the crisis has passed. Again, no federal subsidies or outlays are required.

Declare a 120-day moratorium on payment of dividends by banks. Executives of banks that need capital often worry that failing to pay dividends is a sign of financial instability. A temporary ban across-the-board will end fears and give FDIC time to strengthen banks’ capital base.

Expand FDIC insurance coverage to other financial institutions, including hedge funds, placed under federal regulation.

3. Stabilize Owner-Occupied Homes

Declare a 120-day moratorium on mortgage foreclosures. This will (a) keep families in their homes while components of the broader plan are put in place and the real economy is revived; (b) better ensure that the property does not fall into disrepair; and (c) reduce the decline in housing values created by unoccupied, foreclosed homes.

Devise a post-moratorium program to do work out plans for owner-occupied homes, including federal cash subsidies for owners that can pay for their homes if given time to financially survive this crisis.

Amend federal law so that federal bankruptcy judges are able to modify the terms of mortgages of homeowners in bankruptcy and thus give them more time to work through their financial problems and keep their homes.

4. Share Rescue Profits with U.S. Taxpayers

Whenever the government makes a loan or an equity investment in a distressed financial institution, such as the AIG deal, the public gets a share of any future recovery profits.

Create a true “Social Security Lockbox” for the warrants and equity the federal government acquires as part of this financial rescue. The goal is not long-term federal ownership, but to assist these organizations in returning to a sound operation and then make a prudent sale of the public equity.

Restrict the investment of those funds to AAA-rated state and local infrastructure bonds, which provide safe, long-term investments that will stimulate the real economy, create new jobs, and fiscally strengthen the Social Security System.

5. Oversight

Create an independent agency/board to oversee and manage the non-FDIC/SEC portions of the Rescue Plan and report to Congress on a regular basis. The Board would consist of:

Secretary of Treasury (Chair).

Chairman of the Federal Reserve Board,

Chairman of the FDIC,

Chairman of the SEC,

Comptroller General of the United States,

One appointee by each of the Majority and Minority Leaders of the House of Representatives and the U.S. Senate.

Create a new Joint Committee of Congress to oversee the plan and provide recommendations to Congress. The new Joint Committee would consist of representatives from all standing committees with partial jurisdiction for resolving this financial crisis. The goal is to involve all relevant committees in this rescue plan.

6. Create an Emergency Financial Crimes Office in the Department of Justice

The mission of this unit is to investigate any criminal acts that led to this crisis, hold the guilty accountable, and disgorge assets from individuals and institutions found guilty.

The head of the Office will be an experienced, non-political career prosecutor appointed by the President and confirmed by the U.S. Senate.

The Congress will provide sufficient funds to staff the Office with qualified attorneys and the necessary support staff of accountants and investigators.

Phase Two – Action by Congress Post-Election

7. Reinstitute a modernized Glass-Steagall Act, which covers and regulates all financial institutions including hedge funds

The goal is to restore prudence and accountability to the U.S. financial system through appropriate regulation.

Oversight of the financial rescue.  

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Comments

    • Unlike Niki Tsongas who can only tell us that she supports whatever she is told to support whenever somebody gets their act together and decides what it is that she supports.
      The same can be said for pretty much the rest of our flipping congress.

  2. but even a cursory reading sees that there are costs here. There are some ideas that are similar to things that various Congressmen (and women) are saying on the floor of the Senate. They are calling for more regulation, although they are not calling it the Glass-Steagall act, because it is not that.

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    p>The first idea has the problem that if done with no oversight it is ENRON accounting – this is actually loosening regulation.

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    p>His provision to keep people in their homes is just another way to do what the Kerry/Smith provision, written for the stimulus package and finally included in the Banking bill tries to do in a simpler way – it provides money that allows the states to re-negotiate mortgagaes that can be salvaged.

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    p>This package has less to commend it then the one be voted on – I’m not even sure it costs less as he doesn’t estimate it.

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    p>

    • Nowhere in this proposal are we required to fork over hundreds of billions of dollars for start up costs.
      Many of the proposals put forth do need debate but first we will have to survive the latest attempt to railroad through this much beloved paulson plan.

          • I was speaking of. There are caps on executive golden parachutes and executive compensation. There is extensive regulation and oversight on what Treasury does, where there was specifically none in Bush’s bill. There is money to help with student loans and renegotiating more mortgages – which reduces the loss. Also the companies that participate in the bailout must provide warrants so the taxpayer is rewarded if the company grows. These are the major changes.

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            p>I assume the august reporting of the NY Post mentioned these as well as the pork.

            • I had hoped that you would respond to my querry about the ZERO BANK RESERVE feature but sadly you have chosen to bypass it. This is unfortunate because in the end this plan will be jusdged on its ultimnate failure to do the advertised task of freeing the credit markets without entirely wiping out the banking sector and currency and this provision, in the hands of proven incompetants, could easily do just that.
              So you would instead care to recount the approved talking points .. sigh ..

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              p>The provisions you mentioned have indeed been discussed in deatail at the Post, each disected and placed in their proper light as gratuitous fluff or window dressing as little or no effort was placed into obscuring the loopholes that were clearly provided with each of the provisions.
              In the end each and every one of Paulsons original demands have been left in place and uninhibiited by any meaningful restrictions.
              No other mechanisms for loosening credit were at any point seriously discussed.
              In the end it will be the Paulson plan that will be passed or no plan at all, although judging by last nights pork fest the administration has agreed to loosen its restriction against piling on of unrelated spendthrift measures.
              The legislative process can be quite distasteful when one finds oneself governed in a corporate kleptocracy.

              • although I listened to the Senate speeches, both Democrat and Republican, for and against, yesterday and have read articles in papers and news magazines, I don’t know what you mean. Taking the words literally, it would mean that rather than the very small % of a bank’s deposits that must be on hand, the minimum would be zero I didn’t see this in anything – so I was intending to look further.

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                p>I frankly don’t trust the NY Post. It is not all that reputable.  

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