My proposal
Paulson has a proposal. House Republicans have a proposal. They both have issues. At the end of the day, I think Paulson's is the one worth salvaging if for no other reason than I don't want the government getting into the mortgage backed securities insurance business. How any Republican can say with a straight face that the $700B bailout is "too socialist" but then support this other plan is beyond me. Here's my proposal.
Take the $700B and use it to fund the start-up of a new Government Sponsored Enterprise (GSE). Yes, these are the same types of entities that Fannie and Freddie were but read on please. This company would do the following:
1) One share of stock would be issued to every taxpayer and dependent who filed return for 2007. Obviously this screws non-earners and there might need to be some mechanism for those that were unemployed for the entirety of 2007. Assuming 300 million people that works to a share price of roughly $2300M. This serves a dual purpose of functioning almost exactly like a $2300 tax rebate. The shares wouldn't be tradeable until 12/31/2008.
2) The company would be barred from lobbying congress or advertising. They will be permitted to have one congressional liason who will brief congress bi-annually on the needs of the company. This liason's contact with congress will be entirely and always open to the Freedom of Information Act. Congress will set an additional small sum aside to be used to advertise on its behalf for as long as they deem necessary.
3) Corporate salaries at the company will be limited to the salary of the highest ranking government official (~$440M the last time I checked).
4) The company would be barred from taking on liabilities in excess of 50% of it's capital. Some amount of leveraging is required for any business to function (Accounts Payable if nothing else) and I think it's better to place a low limit then to allow nothing and force them to sit on cash for operations.
5) The company's sole legal mandate is to buy and sell Mortgage Backed Securities, Derivatives, Collateralized Debt Obligations and other financial instruments. They are barred from owning common stock or preferred stock in any entity. They are barred from creating subsidiaries.
6) The board shall consist of a rolling membership of 11 people. 9 will have rolling 3 year terms with one renewal. One will be a congressional appointee and one will be an executive branch appointee. To be eligible for the board a person must own LESS than 5% and be unaffiliated with any member of management or any other board member (other then their dealings as it relates to the company). Salaries shall be one half of the corporate officer limit.
7) The company will be required to comply with all SEC and other regulatory filings. It's balance sheet will be examined for safety and soundness by the OCC on an annual basis.
This solution (I believe) solves all (or almost all) of the concerns that have been raised. Maybe someone smarter then me will see this and run with it.
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Haikus are easy
Most make very little sense
Refrigerator
Take the $700B and use it to fund the start-up of a new Government Sponsored Enterprise (GSE). Yes, these are the same types of entities that Fannie and Freddie were but read on please. This company would do the following:
1) One share of stock would be issued to every taxpayer and dependent who filed return for 2007. Obviously this screws non-earners and there might need to be some mechanism for those that were unemployed for the entirety of 2007. Assuming 300 million people that works to a share price of roughly $2300M. This serves a dual purpose of functioning almost exactly like a $2300 tax rebate. The shares wouldn't be tradeable until 12/31/2008.
2) The company would be barred from lobbying congress or advertising. They will be permitted to have one congressional liason who will brief congress bi-annually on the needs of the company. This liason's contact with congress will be entirely and always open to the Freedom of Information Act. Congress will set an additional small sum aside to be used to advertise on its behalf for as long as they deem necessary.
3) Corporate salaries at the company will be limited to the salary of the highest ranking government official (~$440M the last time I checked).
4) The company would be barred from taking on liabilities in excess of 50% of it's capital. Some amount of leveraging is required for any business to function (Accounts Payable if nothing else) and I think it's better to place a low limit then to allow nothing and force them to sit on cash for operations.
5) The company's sole legal mandate is to buy and sell Mortgage Backed Securities, Derivatives, Collateralized Debt Obligations and other financial instruments. They are barred from owning common stock or preferred stock in any entity. They are barred from creating subsidiaries.
6) The board shall consist of a rolling membership of 11 people. 9 will have rolling 3 year terms with one renewal. One will be a congressional appointee and one will be an executive branch appointee. To be eligible for the board a person must own LESS than 5% and be unaffiliated with any member of management or any other board member (other then their dealings as it relates to the company). Salaries shall be one half of the corporate officer limit.
7) The company will be required to comply with all SEC and other regulatory filings. It's balance sheet will be examined for safety and soundness by the OCC on an annual basis.
This solution (I believe) solves all (or almost all) of the concerns that have been raised. Maybe someone smarter then me will see this and run with it.
--
Haikus are easy
Most make very little sense
Refrigerator
