$700 billion package draft legislation published, awaits approval.
The $700 billion proposed bailout package has been officially called the Emergency Economic Stabilization Act of 2008, reports MarketWatch, and a draft text has finally been approved and sent forth to be voted on by U.S. lawmakers. The plan, now being referred to more respectfully as a “rescue plan” (what House Speaker Nancy Pelosi called a “buy-in” rather than a “bailout,” quoted MarketWatch), calls for the immediate release of $250 billion worth of funds, plus an additional $100 billion on the President’s signature, and then another $350 billion open for distribution should Congress wish.
The plan outlines a number of different strategies that the U.S. Treasury may take to support ailing financial institutions that have seen their balances sheets and share prices rocked in the wake of the U.S. housing crisis and global credit crunch.
A one page summary of the Stabilization Act states, in reference to the subject of taxpayer protection:
Taxpayers should not be expected to pay for Wall Street’s mistakes. The legislation requires companies that sell some of their bad assets to the government to provide warrants so that taxpayers will benefit from any future growth these companies mayexperience as a result of participation in this program. The legislation also requires the President to submit legislation that would cover any losses to taxpayers resulting from this program from financial institutions.
MarketWatch pointed out that stock index futures around the world are showing weakness Monday morning despite the plan’s release and expectation of approval, as analysts remain skeptical that it will be enough to shore up crippled markets.
