House of Representatives Reject Bailout Plan

The latest version of the $700 billion bailout plan has been rejected by the U.S. House of Representatives, voting against the package 228-205. Earlier this morning before the vote, President Bush expressed confidence that the Emergency Economic Stabilization Act of 2008 would be passed by both houses. Stock markets around the world took a dive in response to the news.


The rejected legislation addressed the following:

• Giving the Treasury $250 billion, initially, to buy bad mortgages from banks in order to free up the frozen credit market, allowing the nation's economic wheels to begin turning again. The Treasury would have easy access to another $100 billion if the President deemed it necessary, and then an additional $350 billion that could be disapproved by Congress.

• Keeping troubled homeowners in their homes; the Treasury and other federal agencies that own or control loans would be required to modify home mortgages to help the homeowners. The HOPE for Homeowners program would be expanded by expanding eligibility and giving HUD more options and tools in helping troubled homeowners.

• Protecting the taxpayers by requiring the bailed-out companies to sell some of their assets to the Treasury, so that any future growth of the companies could benefit taxpayers. Also, requires the President to submit legislation that would require a small, broad-based fee to all financial institutions to help off-set the program cost to taxpayers.

• Not allowing the executives who made bad decisions to dump their problems on the government and then walk away rich while the rest of the country suffers. Limits on golden parachutes, and requiring executives to return unearned bonuses. Some tax benefits will be restricted, and in some cases there will be caps on executive pay.

• The establishment of an Oversight Board to ensure that the Treasury does not act in an arbitrary manner. The requirement that the Treasury report on the use of funds and the progress in addressing the issues. Also, establishes a special inspector general to protect against waste, fraud, and abuse.

President Bush and congressional leaders may reintroduce the bill in a new form or may have to resort to other measures.


Sources:
The White House
Reuters.com