Congress Adding Needed Oversight to Bailout Plan

Congressman Barney Frank, Chairman of the Housing Financial Service Committee, is working with lawmakers to create some much-needed oversights to the $700 billion bailout proposed by U.S. Treasury Secretary Henry Paulson. Frank's understanding of what caused the banking crisis, what will happen if nothing is done, and what alternatives need to be included will help shepherd a solution through Congress. The additional measures include:

• Aid for homeowners trying to avoid foreclosure.
• An oversight structure that will review Treasury's purchase and sale of mortgages.
• A government equity stake in companies that receive bailout assistance.
• Limits on executive compensation of rescued firms.

The additional measures are being negotiated between Frank, Senate Democrats and Secretary Paulson. In addition, Senate Republicans are developing an alternative bailout package. The measures are needed to address concerns that the bailout is relieving bankers from the consequences of their bad decisions without compensating taxpayers. (Source: Bloomberg, Democrats Say They've Narrowed Differences With Paulson on Rescue, September 23, 2008)

For an explanation of the events that lead to the crisis, read Federal Intervention in the Banking Panic