Everyone's making Senate Banking Committee Chair Chris Dodd's 44-page rebuttal to Paulson and Bernanke's proposal sound like it's so onerous. Paulson and Bernanke are basically like, "Trust us, we can't even really read it, that's how fast this thing needs to go through," and even the Times called it "hefty" this morning, which is just plain mean. Especially because someone at Dodd's office has actually whittled the thing down to human language and slapped it on his Website. Essentially, it seems to us, all the dude wants is for the Dynamic Duo to amend their plan by adding some transparency measures, like requiring monthly status reports to Congress and establishing an oversight board, and to make sure that the guys who got us into this sticky wicket don't wriggle out of it with the same deal as before. If you still find those too hefty, we have boiled Dodd's argument into its four basic points, after the jump.
1. Taxpayers ought to be able to receive stock in the firms whose distressed debt the government will buy. Since they're expected to increase in value. Sweden did this in the nineties when its financial system melted down, and it totally worked.
Why the Treasury Can't Just Do That: Lawmakers want to require an equity stake, while the administration wants "flexibility" to decide "later," a Treasury official told the Times.
2. Limit the pay and severance of top executives. It is kind of gross that AIG CEO Bob Williamstud could have walked away with $22 million in severance, even he thinks it's gross, since he didn't actually do it. We all agree on this, right? Right? Um, no, apparently not.
Why the Treasury Can't Just Do That: Unclear. On Sunday he admitted there'd been "excesses" of executive pay in the past, and allowed that "pay should be for performance, not for failure." But he said such changes should be considered separate from, and after, the bailout bill.
3. Minimize conflict of interest: "Treasury intends to hire large asset management firms to organize the purchases of the 'toxic' assets as well as their sale. However, many of these firms, such as PIMCO and Blackrock, have large positions in the same assets ... The Treasury proposal largely ignores this issue." Nice!
Why Can't the Treasury Just Add That Provision? Unclear, therefore we are forced to assume they think it will just take AGES to go through and identify all of the various relationships holding their shit together.
4. Adding provisions for homeowners. Such as allowing bankruptcy judges to reduce mortgage payments for borrowers facing foreclosure.
Why the Treasury Can't Just Add That: Unclear, even though it seems to be in everybody's best interests.
Summary: Dodd Legislative Changes to Treasury Proposal [Dodd.Senate.Gov]