I am not a financial person but I finally am beginning to read some accounts of just what is being pushed for. One account says that the American public would be taking on all the bad debt for the high risk banks etc but they would get NONE of the profits. So, what, does this mean that the PRIVATE companies that took on such risks would be bailed out and be able to continue what they've been doing with no accountability or reward to the taxpayer who (unwillingly, I think) bailed them out?  I mean, we're talking about 700 BILLION dollars. That makes McCain's involvement with the Savings and Loans Keating 5 scandal look like chump change.

Paul Krugman says the Treasury needs to explain to Congress WHY throwing money at assets would even work!

Here’s the thing: historically, financial system rescues have involved seizing the troubled institutions and guaranteeing their debts; only after that did the government try to repackage and sell their assets. The feds took over S&Ls first, protecting their depositors, then transferred their bad assets to the RTC. The Swedes took over troubled banks, again protecting their depositors, before transferring their assets to their equivalent institutions.

The Treasury plan, by contrast, looks like an attempt to restore confidence in the financial system — that is, convince creditors of troubled institutions that everything’s OK — simply by buying assets off these institutions. This will only work if the prices Treasury pays are much higher than current market prices; that, in turn, can only be 1 either if this is mainly a liquidity problem — which seems doubtful — or if Treasury is going to be paying a huge premium, in effect throwing taxpayers’ money at the financial world.

And there’s no quid pro quo here — nothing that gives taxpayers a stake in the upside, nothing that ensures that the money is used to stabilize the system rather than reward the undeserving.

The proposal would allow foreign banks in the US to get bailed out... by us.

In a change from the original proposal sent to Capitol Hill, foreign-based banks with big U.S. operations could qualify for the Treasury Department’s mortgage bailout, according to the fine print of an administration statement Saturday night.

The theory, according to a participant in the negotiations, is that if the goal is to solve a liquidity crisis, it makes no sense to exclude banks that do a lot of lending in the United States.

The legislative outline that went to Capitol Hill at 1:30 a.m. Saturday had said that an eligible financial institution had to have has “its headquarters in the United States.” That would exclude foreign-based institutions with big U.S. operations, such as Barclays, Credit Suisse, Deutsche Bank, HSBC, Royal Bank of Scotland and UBS. The theory, according to a participant in the negotiations, is that if the goal is to solve a liquidity crisis, it makes no sense to exclude banks that do a lot of lending in the United States.

But a Treasury “Fact Sheet” released at 7:15 last night sought to give the administration more flexibility, with an expanded definition that could include all of those banks: “Participating financial institutions must have significant operations in the U.S., unless the Secretary makes a determination, in consultation with the Chairman of the Federal Reserve, that broader eligibility is necessary to effectively stabilize financial markets.”

Did you catch that? The Treasury CHANGED the proposal to include all those other banks and institutions. I'll tell you something else that seesm bizarre to me. Why is the Treasury making all these decisions instead of Congress?

The major change in the suggested eligibility requirements is the biggest change that Treasury publicly made after a day of briefings and conversations with Capitol Hill, and is likely the first of many.

Going farther-TPM asks if this isn't just rewarding the Bush administration and Republicans-the same bums who CREATED this mess.

The current proposal for the bailout -- $700 billion to be used however the administration chooses to use it -- should not be allowed to pass in its current form. This is the same administration that has mismanaged Iraq, DOJ, Katrina. Why can they be trusted to preside over this in a way that is even-handed and for the benefit of the taxpayers? As Krugman and Atrios have pointed out, if insolvency rather than liquidity is the real problem, then this may not even fix the problem. Even if there is some modest stimulus package appended to the bill, the bill will still be a bad idea if it gives such unprecedented and unchecked power to the Bush administration.

Here's the plan, as leaked. (with the caveat about foreign banks, as noted above)

LEGISLATIVE PROPOSAL FOR TREASURY AUTHORITY

TO PURCHASE MORTGAGE-RELATED ASSETS

Section 1. Short Title.

This Act may be cited as ____________________.

Sec. 2. Purchases of Mortgage-Related Assets.

(a) Authority to Purchase.--The Secretary is authorized to purchase, and to make and fund commitments to purchase, on such terms and conditions as determined by the Secretary, mortgage-related assets from any financial institution having its headquarters in the United States.

(b) Necessary Actions.--The Secretary is authorized to take such actions as the Secretary deems necessary to carry out the authorities in this Act, including, without limitation:

(1) appointing such employees as may be required to carry out the authorities in this Act and defining their duties;

(2) entering into contracts, including contracts for services authorized by section 3109 of title 5, United States Code, without regard to any other provision of law regarding public contracts;

(3) designating financial institutions as financial agents of the Government, and they shall perform all such reasonable duties related to this Act as financial agents of the Government as may be required of them;

(4) establishing vehicles that are authorized, subject to supervision by the Secretary, to purchase mortgage-related assets and issue obligations; and

(5) issuing such regulations and other guidance as may be necessary or appropriate to define terms or carry out the authorities of this Act.

Sec. 3. Considerations.

In exercising the authorities granted in this Act, the Secretary shall take into consideration means for--

(1) providing stability or preventing disruption to the financial markets or banking system; and

(2) protecting the taxpayer.

Sec. 4. Reports to Congress.

Within three months of the first exercise of the authority granted in section 2(a), and semiannually thereafter, the Secretary shall report to the Committees on the Budget, Financial Services, and Ways and Means of the House of Representatives and the Committees on the Budget, Finance, and Banking, Housing, and Urban Affairs of the Senate with respect to the authorities exercised under this Act and the considerations required by section 3.

Sec. 5. Rights; Management; Sale of Mortgage-Related Assets.

(a) Exercise of Rights.--The Secretary may, at any time, exercise any rights received in connection with mortgage-related assets purchased under this Act.

(b) Management of Mortgage-Related Assets.--The Secretary shall have authority to manage mortgage-related assets purchased under this Act, including revenues and portfolio risks therefrom.

(c) Sale of Mortgage-Related Assets.--The Secretary may, at any time, upon terms and conditions and at prices determined by the Secretary, sell, or enter into securities loans, repurchase transactions or other financial transactions in regard to, any mortgage-related asset purchased under this Act.

(d) Application of Sunset to Mortgage-Related Assets.--The authority of the Secretary to hold any mortgage-related asset purchased under this Act before the termination date in section 9, or to purchase or fund the purchase of a mortgage-related asset under a commitment entered into before the termination date in section 9, is not subject to the provisions of section 9.

Sec. 6. Maximum Amount of Authorized Purchases.

The Secretary’s authority to purchase mortgage-related assets under this Act shall be limited to $700,000,000,000 outstanding at any one time

Sec. 7. Funding.

For the purpose of the authorities granted in this Act, and for the costs of administering those authorities, the Secretary may use the proceeds of the sale of any securities issued under chapter 31 of title 31, United States Code, and the purposes for which securities may be issued under chapter 31 of title 31, United States Code, are extended to include actions authorized by this Act, including the payment of administrative expenses. Any funds expended for actions authorized by this Act, including the payment of administrative expenses, shall be deemed appropriated at the time of such expenditure.

Sec. 8. Review.

Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.

Sec. 9. Termination of Authority.

The authorities under this Act, with the exception of authorities granted in sections 2(b)(5), 5 and 7, shall terminate two years from the date of enactment of this Act.

Sec. 10. Increase in Statutory Limit on the Public Debt.

Subsection (b) of section 3101 of title 31, United States Code, is amended by striking out the dollar limitation contained in such subsection and inserting in lieu thereof $11,315,000,000,000.

Sec. 11. Credit Reform.

The costs of purchases of mortgage-related assets made under section 2(a) of this Act shall be determined as provided under the Federal Credit Reform Act of 1990, as applicable.

Sec. 12. Definitions.

For purposes of this section, the following definitions shall apply:

(1) Mortgage-Related Assets.--The term “mortgage-related assets” means residential or commercial mortgages and any securities, obligations, or other instruments that are based on or related to such mortgages, that in each case was originated or issued on or before September 17, 2008.

(2) Secretary.--The term “Secretary” means the Secretary of the Treasury.

(3) United States.--The term “United States” means the States, territories, and possessions of the United States and the District of Columbia.

Cenk Uygur says this

I am so mad about this proposed federal bailout of Wall Street, I can't see straight. Do you understand what they're going to do? They are about to steal ONE TRILLION dollars from us and just hand it over to the guys on Wall Street who screwed everything up. They are going to take all of their bad loans and dump it on us. We're going to have pay for their mistakes!

But they already made the money. They keep the profits and we keep the debts. It is absolutely, positively outrageous. The only thing more outrageous is that both of the presidential candidates are going along with it. Obama seems to be supporting it almost more enthusiastically than McCain. That is a terrible idea.

Here are two important things you must know about the impact of the financial bailout.

First, when the American people find out what's been done here, they are going to be livid. Conservatives, liberals, moderates, everyone. Why should we have to pay a trillion dollars of our own money to save the asses of bankers who already made a killing from these loans? Now, they get to unload all of their "toxic assets," as Paulson is calling it, on us. Who in their right mind would support that?

Wall Street is ecstatic. The market is through the roof right now because they can't believe they got such a good deal. Understand this is not an isolated bailout here and there. The Treasury Secretary just said he is going to take ALL of their bad loans off their hands. Why wouldn't they be elated?

The Bush administration and the Republicans (especially Phil Gramm) pushed for deregulation that allowed for, and almost encouraged, these mistakes. Now, the guys who told us they didn't believe in big government are going to send in big government to pick up the tab. Privatize the profits, socialize the debts. We have been robbed!

Even Jim Bunning (R-KY) said that when Hugo Chavez nationalized industries in his country at least the Venezuelan people get the profits as well. We only get the losses.

Let me suggest that if you see this the same way that I do, that you get on the phone TOMORROW and call up John Cornyn, KBH, and Chet Edwards and LOUDLY say that you are against rushing into this deal, which only seems to reward the corrupt and penalize the rest of us suckers.