Posted on 09/29/2008 12:14:43 PM PDT by 1curiousmind
Proposal Uses Private Equity to Keep Government from Buying Mortgage Assets, Assures Wall Street Won’t Get Rich While Taxpayers Get Stuck with Trillion Dollar Bill
September 27, 2008
Washington, DC – Rep. Darrell Issa, a businessman and entrepreneur before coming to Congress, today offered a new proposal to protect the economy without a taxpayer-funded bail out of Wall Street. Under Rep. Issa’s plan, private investors would provide the capital for a Rescue Fund through the purchase of government issued Guaranteed Recovery Bonds. The Rescue Fund would be managed by the Treasury Department and would offer troubled financial firms interest accruing loans based upon their holdings of at-risk mortgage assets.
“My plan uses private investment and gives Wall Street the same liquidity as the Paulson plan and guarantees that investment firms don’t just dump rotting assets on taxpayers and go on to reap huge profits,” said Issa.
Under the plan, Congress authorizes the Treasury to issue up to $700 billion dollars in unique callable T-Bills (Guaranteed Recovery Bonds) to be purchased by private investors to capitalize a Rescue Fund that will be managed by the Treasury Department. Financial institutions borrow from the fund at a rate that fully covers the interest paid to investors in the Recovery Bonds plus an insurance premium to protect taxpayers.
Under the Issa plan, Financial institutions holding at-risk mortgage-backed securities would be able to borrow from the $700 billion rescue fund established through the special Guaranteed Recovery Bonds. The amount each firm could borrow would be set by the Treasury Department using Secretary Paulson’s mark-to-market to maturity valuation of the mortgage backed securities they hold. Financial institutions would continue to hold their mortgage assets and be responsible for liquidating them over time, so taxpayers would not be saddled with the liability or cost of disposing of troubled assets. As firms pay-back loans to Treasury, the revenue is used to pay-off the Guaranteed Recovery Bonds. The insurance premium paid by borrowers will protect taxpayers from default.
A point by point summary of Rep. Issa’s proposal and a comparison with the Paulson plan can be found below.
This sounds interesting. Good for Darryl Issa for putting a viable alternative forth.
I am here at FR more than I should be. Sort of an addict I guess. I do miss some stuff on occasion. Wondering if Steve Forbes has, or has had any input for us. Has anybody seen anything from Steve Forbes?
.... we are only rearranging the deck chairs.
This is the one to go with. John should be tallking this up.
Forbes was on Fox this weekend, but I don’t recall what he said. However, I just checked the ‘net and he was for the Paulson plan.
“Sort of an addict I guess.” - gosh , can I relate! :-)
“Wondering if Steve Forbes has, or has had any input for us. Has anybody seen anything from Steve Forbes?” - I’m crossing fingers and hoping that McCain’s silence has been because he is getting input form people like Forbes and will come out with an alternative plan.
If he does, and if it is a viable plan. This election is over!
Where can we buy one of these T bills, can we get one of these documents with Mexican Pesos?
Rep Issa offers something that sounds viable.
Especially when compared to the massive govt intervention that Bush offered.
Right now, however, its a food fight in the House.
Here’s another proposal.
Why not suggest an independent commission of UNBIASED economists and financial experts to propose legislation with no congressional input until a proposal is reached. And do it in PUBLIC and not BEHIND CLOSED DOORS.
Several nights ago, Mr. Newt suggested the gubmint money be made available, but as a LOAN, interest paid, set re-payment schedule, Uncle Sam does not hold/manage the assets. I like this one as well, much simpler then all this gobbeldy-gook, simple bill that could pass easily and the American people understand the terms. But of course, a simple bill means no hidden goodies to entice members to vote for it.
Do you suppose he has the character to be bringing his letter of resignation?
Simple and to the point. Sounds like Mr. Newt. Good one.
You hit the nail on the head about no hidden goodies. The Left will lose loads of taxpayer scammed vote leverage in this deal and are looking to protect their own interests.
The bullet riddled dead body on the floor in this mystery movie is ours, and the Investigators are the MSM that are doing their best to NOT see the smoking gun in the Democrats hand.
exactly.
Boner is an impotent leader.
The majority of Republicans followed Mike Pence.
It is time for Boner to step aside as Minority Leader, and Mike Pence to take his place.
“.... we are only rearranging the deck chairs.”
This is what is happening anyway, just like in 1929.
The money markets and credit lines are manipulated from within. When the whole thing begins to break down, banks and corps crash, leaving the fat cat international Round Table elitists to gladly pick up the pieces for pennies on the dollar.
All with a little help from the Socialists under our own roofs.
Excellent! I hope it gets some traction.
When you find yourself in a hole, STOP DIGGING!
Hey, I can get you one of those Z$I,000,000,000 Zimbabwe notes.
I heard that in a private caucus meeting with Republicans (before the vote), Boehner called the bill a “crap sandwich”.
I would put $1000 of my owm money in that. It’s a free market solution to the problem.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.