User:Ronnotel/Emergency Economic Stabilization Act of 2008

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The Emergency Economic Stabilization Act of 2008 (EESA) was initially proposed as an amendment to the bill H.R. 3997 in the United States House of Representatives. The House voted not to accept the amendment to the bill on September 29, 2008, by a vote of 205-228, with one Representative not voting.[1][2]

Two days later, on October 1, 2008, the Senate amended H.R. 1424 to include the Emergency Economic Stabilization Act of 2008; the Energy Improvement and Extension Act of 2008, and the Tax Extenders and Alternative Minimum Tax Relief Act of 2008.[3][4][5][6] The Senate accepted the amendment and passed the entire amended bill by 74 to 25, which was then passed by the House on October 3. [3][4][7]

As a proposed bailout of United States financial system, its passage created a $700 billion dollar Treasury fund to purchase toxic bank assets.

Official summary of the Legislation[edit]

Emergency Economic Stabilization Act of 2008[8]
Stabilizing the Economy

"The Emergency Economic Stabilization Act of 2008 (EESA) provides up to $700 billion to the Secretary of the Treasury to buy residential and commercial mortgage loans, credit card securitizations, auto loans and other financial assets for which there is no current market. Because of accounting rules that require the value of these loans (assets) to be written to market value, they are negatively impacting the balance sheets of financial insitutions. Due to the fear of the failure of these insitutions, they are not lending money to one another. As a result, they are tightening their credit standards and making fewer loans in an effort to improve their balance sheets by maintaining cash (capital). The fear is that if these institutions continue to fail to lend then it will ultimately be more difficult for working families, small businesses, and other companies to access credit. EESA also establishes a program that would allow companies to insure their troubled assets."

Homeownership Preservation

"EESA requires the Treasury to modify troubled loans - many the result of fraudelent and low doc/no doc applications - wherever possible to help American families keep their homes. It also directs other federal agencies to modify loans that they own or control. Finally, it improves the HOPE for Homeowners program by expanding eligibility and increasing the tools available to the Department of Housing and Urban Development to help more families keep their homes."

Taxpayer Protection

"Taxpayers should not be expected to pay for Wall Street's mistakes. The legislation requires companies that sell some of their bad assets to the government to provide warrants so that taxpayers will benefit from any future growth these companies may experience as a result of participation in this program. The legislation also requires the President to submit legislation that would cover any losses to taxpayers resulting from this program by charging a small, broad-based fee on all financial institutions."

No Windfalls for Executives

"Executives who made bad decisions should not be allowed to dump their bad assets on the government, and then walk away with millions of dollars in bonuses. In order to participate in this program, companies will lose certain tax benefits and, in some cases, must limit executive pay. In addition, the bill limits 'golden parachutes' and requires that unearned bonuses be returned."

Strong Oversight

"Rather than giving the Treasury all the funds at once, the legislation gives the Treasury $250 billion immediately, then requires the President to certify that additional funds are needed ($100 billion, then $350 billion subject to Congressional disapproval). The Treasury must report on the use of the funds and the progress in addressing the crisis. EESA also establishes an Oversight Board so that the Treasury cannot act in an arbitrary manner. It also establishes a special inspector general to protect against waste, fraud and abuse."

See also[edit]

References[edit]

  1. ^ Hirschfeld Davis, Julie (2008-09-29). "House defeats $700B financial markets bailout". Associated Press. 
  2. ^ "Final Vote Results for Roll Call 674". Clerk of the United States House of Representatives. 2008-09-29. 
  3. ^ a b "H.R.1424". THOMAS. Library of Congress. 2008-10-01. Retrieved 2008-10-01.  (Access to legislative history of H.R. 1424)
  4. ^ a b Hulse, Carl (2008-10-01). "Adding Sweeteners, Senate Passes Bailout Plan". New York times. Retrieved 2008-10-01.  Unknown parameter |coauthors= ignored (|author= suggested) (help)
  5. ^ "Senate passes its own bank bailout package". MSNBC. 2008-10-01. 
  6. ^ Amendment to HR 1424 ( the amendment being the text of the Emergency Economic Stabilization Act of 2008) Senate Committee on Banking, Housing and Urban Affairs (October 1, 2008) ( Retrieved October 1, 2008)
    See also the Senate Committee on Banking page: Emergency Economic Stabilization Act of 2008
  7. ^ "Senate passes its own bank bailout package". MSNBC. 2008-10-01. 
  8. ^ Summary of the Emergency Economic Stabilization Act of 2008 United States Senate Committee on Banking, Housing and Urban Affairs. (Retrieved October 2, 2008)

External links[edit]

Category:United States proposed federal legislation Category:United States housing bubble Category:2008 in economics