Thursday, September 25, 2008

The New Bailout Deal

All bipartisan! Love it. Here's the gist of the changes from the initial monster draft:

Those principles will include improved oversight of the program, as well as a plan to phase in the $700 billion investment in stages, while still assuring the administration a virtual free hand for at least the first $350 billion.

There is a greater emphasis on efforts not just to relieve Wall Street firms of their bad debts but also to help homeowners threatened by foreclosure. Companies that benefit from the plan would be expected to limit pay and severance packages for their executives, and community banks are expected to benefit from a new $3 billion tax break as a result of their stock losses in the government takeover of the two mortgage finance giants, Fannie Mae and Freddie Mac.

So it's not as bad as the first kidnappers' demand. They only get half of what they asked for with no strings attached and they have to work a little harder to hide the golden parachutes for their CEOs. And to throw out a few crumbs to the homeowners who are going to lose their houses.

But on the whole the deal worked very nicely for the financial markets. Yes, I know that I should write about how great it is that the deal was changed at all, and it probably was because ordinary people of all stripes said very clearly and loudly that they would not be mugged by highway robbers, even if the latter wore Prada. So take that as written. I'm not ready to make nice.