Administration and Congressional officials announced Sunday, September 28, that they had compromised on the $700 billion financial services bailout plan and would send the revised, 110-page bill to the House of Representatives on Monday, September 29, where many expect there to be significant debate before the bill is sent to the Senate. However, Congress has already delayed its much-loved pre-election adjournment, so quick action is expected.
The bill differs in significant ways from the original four-page prayer submitted by Treasury Secretary Henry Paulson. While the total size of the bailout remains as it was in the original, now the authority to purchase up to $700 billion in distressed mortgages was given in tranches: first $250 million, then an additional $100 million can be requested by the President; if he so desires, he can request the remaining $350 million, but Congress can block the request if it so desires.
The bill now also requires stricter Congressional oversight of the practice of buying and selling the debt instruments; limits the compensation of some executives at companies involved in the Treasury process; requires companies to give warrants to the government convertible to stock; creates a new kind of debt insurance; and allows the government to approve “reasonable” adjustments to mortgages it assumes. Finally, should the government not recoup the $700 billion through the sale of the mortgages it acquires, the bill requires the President to get that amount back from the industry in an unspecified manner.