The Emergency Economic Stabilization Act of 2008

September 28, 2008
Press Release

Significant bipartisan work has built consensus around dramatic improvements to the original Bush-Paulson plan to stabilize American financial markets--including requiring a plan to ensure the taxpayer is repaid in full.

Read the Emergency Economic Stabilization Act of 2008 (SUBJECT TO FURTHER TECHNICAL REVISIONS) .pdf >>

CRITICAL IMPROVEMENTS TO THE RESCUE PLAN

Democrats have insisted from day one on substantial changes to make the Bush-Paulson plan acceptable--protecting American taxpayers and Main Street--and these elements are included in the draft legislation under consideration.

PROTECTION FOR TAXPAYERS, REQUIRING A PLAN TO BE REPAID IN FULL

  • Requiring Congressional review after the first $350 billion is disbursed

  • Gives taxpayers a share of the profits of participating companies, or puts taxpayers first in line to recover assets if a company fails

  • Requires a President five years from now to submit a plan to ensure taxpayers are repaid in full, with Wall Street making up any difference

  • Allows the government to also purchase troubled assets from pension plans, local governments, and small banks that serve low- and middle-income families

LIMITS ON EXCESSIVE COMPENSATION FOR CEOs AND EXECUTIVES

For companies publicly auctioning over $300 million:

  • No multi-million dollar golden parachutes for top 5 executives after auction

  • No tax deduction for executive compensation over $500,000

  • Penalizes golden parachutes for CEOs who are fired or have run the company into the ground

For companies from which the government makes direct purchases:

  • No multi-million dollar golden parachutes

  •  Limits CEO compensation that encourages unnecessary risk-taking

  • Recovers bonuses paid to executives who promise gains that later turn out to be false or inaccurate

STRONG INDEPENDENT OVERSIGHT AND TRANSPARENCY

  • Four separate independent oversight entities or processes to protect the taxpayer

  • A strong oversight board appointed by bipartisan leaders of Congress

  • GAO oversight and audits at Treasury to ensure strong controls; to prevent waste, fraud, and abuse

  • An independent Inspector General to monitor the Treasury Secretary's decisions

  • Transparency--requiring posting of transactions online

  •  Meaningful judicial review of the Treasury Secretary's actions

HELP TO PREVENT HOME FORECLOSURES CRIPPLING THE AMERICAN ECONOMY

  • The government can work with loan servicers to change the terms of mortgages (reduce principal or interest rate, lengthen time to pay back the mortgage) to reduce the 2 million projected foreclosures in the next year

  • Extends provision (enacted earlier in this Congress) to stop tax liability on mortgage foreclosures

  •  Helps save small businesses that need credit by aiding small community banks hurt by the mortgage crisis--allowing these banks to deduct losses from investments in Fannie Mae and Freddie Mac stocks