Highlights
The 110-page Emergency Economic Stabilization Act of 2008 -- and the $700 billion that goes with it -- was designed to "restore liquidity and stability to the financial system" and to protect U.S. homeownership and other personal investments. The key elements:
Financial institutions* Provides as much as $700 billion to the U.S. Treasury, including an immediate payment of $250 billion. If needed, there would be additional payments of $100 billion and $350 billion, with the last payment subject to congressional approval.
* The Treasury would create a program to buy distressed mortgage-related investments and other troubled assets from cash-strapped banks and financial institutions. The aim is to free the companies to resume raising money and lending.
* Creates a program allowing banks to buy government insurance to cover the value of certain troubled assets instead of selling them to the government.
Taxpayers* Taxpayers would get a slice of ownership in financial institutions that sell their devalued assets to the government. If the companies involved subsequently thrive, the taxpayers would benefit.
* If the taxpayer outlays under the program are not recouped after five years, the president must come up with a plan, to be funded by financial institutions, to cover the costs.
Homeowners* Requires the Treasury to modify troubled mortgages purchased or controlled through the bailout program wherever possible, and to encourage loan servicers to modify loans through HOPE for Homeowners and other U.S. assistance programs.
* Allows the Treasury to use loan guarantees and credit fixes to stem foreclosures, and expands eligibility for HOPE for Homeowners.
* Requires the Treasury to coordinate with other U.S. agencies that hold troubled assets to modify mortgages.
Executive pay and other measures* Requires companies that participate in the bailout program to pay excise taxes, forgo certain tax benefits and, in certain cases, to limit incentives, executive pay and the compensation paid to departing executives. It would require unearned bonuses to be returned, if applicable.
* Automatically ends the asset purchasing program on Dec. 31, 2009, but can be extended another year.
* Requires profits from the sale of troubled assets to be applied to the national debt.
Oversight* Creates a multi-department Financial Stability Oversight Board within the U.S. government; creates a congressional oversight panel to review bailout-related issues; creates the Office of the Special Inspector General to oversee and report on the asset purchasing program; and requires periodic cost estimates from other government agencies.
* Requires the Treasury to publicly disclose, within two business days, the details of any transactions related to the bill.
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Elizabeth Douglass
