Sept 25 The following is a text of an "economic
rescue package" proposed by a group of Republicans in the U.S.
House of Representatives as an alternative to a $700 billion
debt purchase plan agreed to in principle earlier on Thursday
by a bipartisan group of House and Senate negotiators:
Economic Rescue Package
Common Sense Plan to Have Wall Street Fund the Recovery, Not
Rather than providing taxpayer funded purchases of frozen
mortgage assets to solve this problem, we should adopt a plan
to insure mortgage back securities through payment of insurance
Currently the federal government insures approximately half of
all mortgage backed securities. (MBS) We can insure the rest of
current outstanding MBS; however, rather than taxpayers funding
insurance, the holders of these assets should pay for it.
Treasury Department can design a system to charge premiums to
the holders of MBS to fully finance this insurance.
Have Private Capital Injection to the Financial Markets, Not
Instead of injecting taxpayer capital into the market to
produce liquidity, private capital can be drawn into the market
by removing regulatory and tax barriers that are currently
blocking private capital formation. Too much private capital is
sitting on the sidelines during this crisis.
Temporary tax relief provisions can help companies free up
capital to maintain operations, create jobs, and lend to one
another. In addition, we should allow for a temporary
suspension of dividend payments by financial institutions and
other regulatory measures to address the problems surrounding
private capital liquidity.
Immediate Transparency, Oversight, and Market Reform
Increase Transparency. Require participating firms to disclose
to Treasury the value of their mortgage assets on their books,
the value of any private bids within the last year for such
assets, and their last audit report.
Limit Federal Exposure for High Risk Loans: Mandate that the
GSEs no longer securitize any unsound mortgages.
Call on the SEC to audit reports of failed companies to ensure
that the financial standing of these troubled companies was
Wall Street Executives should not benefit from taxpayer
Call on the SEC to review the performance of the Credit Rating
Agencies and their ability to accurately reflect the risks of
these failed investment securities.
Create a blue ribbon panel with representatives of Treasury,
SEC, and the Fed to make recommendations