Here's a synopsis of provisions in the bail out bill including tax breaks.

[seasat]

Instead of reading all 450 pages, I found this synopsis of the bill from McClatchy.

The tax provisions in the bill are mostly progressive though there is some BS for coal gasification and clean coal stuff. They're raising the exemption level for the alternative minimum tax from $66,250/$44,350 for joint or single filers to $69,950/$46,200 (the biggest additional cost). They've got a bunch of renewable energy tax credits that are offset by increases taxes on oil and gas companies. There's also an extension of the R&E tax credit. There's also tax breaks for hurricane and flooding victims. There are a few special interest tax credits in there like a weird exemption from excise taxes for wooden arrow shafts used by children.

While we don't really need all these tax credits now, with the exception of the AMT fix, they are pretty small amounts.

[BrklynLiberal]

1. I am still very nervous about this.and do not believe it is in the best interest of the majority of

Americans.


Give the Treasury secretary broad discretion to buy virtually any distressed asset in an effort to get it off the books of a troubled bank or financial firm and help unclog the credit markets. This is called the Troubled Assets Relief Program, or TARP.

Limit courts from issuing restraining orders or injunctions against the Treasury secretary unless alleging a constitutional violation. In those cases, injunctions would have to be handled on an expedited basis by federal courts. Significantly, there is no limited liability expressed that would necessarily protect the federal government from lawsuits by investors when the government purchases distressed assets.

Raise the nation's debt ceiling to $11.3 trillion.

Limit the tax write-offs for executive compensation above $500,000 for companies that sell distressed assets to the government.

[seasat]

2. I don't agree with the change in the mark to market pricing .

That one worries me because that rule was put in place after Enron to prohibit deceptive accounting. I know it's there to get the house Repub support but it doesn't sound like a great idea to me and I'm not sure what it accomplishes in the short run.

I agree, the tax write off compensation stuff is BS too because it mainly effects the share holders but the amount of the write off is pretty small in comparison to the size of these companies. It's more of a cosmetic measure to make it look like they're getting the CEOs since most of these companies have already fired the executives that were responsible. I'd have liked to seen it with something more punitive for these companies to make sure that these companies that participate are really in need and not just cleaning up their books.

[girl gone mad]

3. mark to market requirements..

were designed to require banks and institutions to value their assets fairly to prevent another Enron type scandal. Enron held assets on their books at values far above reality, then when the shit hit the fan, those assets could not deliver and the house of cards came down.

The downside to mark to market is that it also forces companies to mark down assets too early. The best analogy I've heard is to imagine that Sears is going out of business. They mark every washing machine in stock at $100 to get rid of it. Then on the last day of their going out of business sale they mark them down to $5 each.

Mark to market then forces every other washing machine retailer to value his inventory at the same $5 value. Once Sears is gone and the market returns to normal, they'll be able to sell that washer for $400, just like before. But for today, they have to mark it down to a $5 cost basis and recognize that loss on the books.

In the mortgage market, you have bundled packages of sub-prime loans - let's say 500 individual loans packaged into a single bundle. Now assume (hypothetically) we are pretty confident that 20% of these loans are going to blow up on us. They are going to be worthless. But 80% of these loans will continue to be paid on time and at some time in the future they will be paid off and they will have been profitable for the lender.

But mark to market is forcing these institutions to value most of their bundled loans as worthless. The 20% is dragging the 80% down with them. Now we know that someday the majority of these loans will be OK, but as of today we have to assume on the books that we are going to lose all of the money.

On the other hand, suspending mark to market would allow the banks to continue to hide the toxic assets which would seem to be an obstacle to restoring public trust.

[seasat]

7. Most investors would realize that the MBS value no longer is market priced.

They would factor into their investments in these banks that the price of the mortgage backed securities does not reflect the actual value because of the suspension of the rule. If they keep the rule in place long after the market for these securities recover, it could be used fraudulently. It also seems like the Repubs are over emphasizing it because it keeps them from admitting that deregulation didn't work. Instead they can put the blame on a regulation that was recently passed. While it's not a real big issue to me in this bill, changing the rule doesn't seem like a good idea.

[ProSense]

4. Here is another synopsis

09/30/2008

Kerry Statement on Financial Crisis

BOSTON, MA – Sen. John Kerry held a press conference this afternoon to outline the urgency of passing comprehensive economic legislation to avoid the collapse of Wall Street from hitting families and business across the country.

Below is Kerry’s statement as prepared for delivery:

“This has been a volatile time for our financial system and our economy. But, I strongly believe that the Congress will soon come to an agreement on an economic rescue plan that will help restore strength and stability to America's financial system and overall economy. After the enactment of this plan, along with the recent actions taken by the Treasury Department and the Federal Reserve, our nation will have taken a critical step to address the current challenges to our economy.

“But make no mistake about it, the Congress must come together across party lines to address our economic challenges. We must put our broken politics aside and unite to restore confidence in our capital markets and our financial institutions. Today is a time for action, not for partisanship.

“The legislation that failed in the House of Representatives yesterday was not a bailout for Wall Street. It was developed to stop the ripple effect of the collapse of Wall Street’s major financial institutions from developing into an economic Tsunami sweeping across the country. It is an effort to protect businesses and families from a serious credit crunch. The stark reality we face is that without federal assistance, our financial system may collapse. Small businesses would be unable to obtain financing and jobs would vanish. Families would be unable to borrow for new homes or to send their children to college. Retirement funds could plummet. Those are the stakes.

“I support the compromise legislation to provide up to $700 billion to the Secretary of the Treasury to buy mortgages and other assets from financial institutions. It will help restore confidence in our capital markets and our financial institutions. It will help our nation avert serious economic dislocation that could be the cost of inaction. Specifically, the legislation:

- Requires the Treasury to modify the loans they buy to help American families keep their homes and expands federal assistance to families facing foreclosure;

- Includes strong Congressional oversight, establishes a special Inspector General and allows Judicial review of the program;

- Requires companies that take advantage of this program provide warrants so taxpayers will benefit from any future growth of these companies;

- Includes important limitations on executive compensation for those participating in the program;

“In the Senate, I have been working to get at the root of our economic problems helping to ease the foreclosure crisis and increase access to capital for small businesses. I’m pleased that I was able to include provisions in the Housing and Economy Recovery Act that will:

- Help limit foreclosures by providing additional mortgage credit;

- Increase protections from foreclosure for our veterans;

- Provide additional funding for the Community Development Block Grant program, and;

- Create construction jobs and produce affordable housing by establishing the National Affordable Housing Trust Fund.

“A recent federal survey reports that more than 65 percent of banks have significantly tightened their lending standards for small businesses. As Chairman of the Senate Small Business Committee, I have held five hearings about the credit crunch and the Small Business Administration’s lending programs over the past two years. I introduced legislation to temporarily eliminate fees and double the loan limits for many Small Business Administration loan programs. This will help stimulate economic growth and job creation by increasing access to capital for small business.

“I urge the Congress to come together to enact legislation to protect our vital national interest in the continued health of our economy.”

[BrklynLiberal]

5. Those two synopses hardly overlap at all....

[Alcibiades]

6. Why don't they just print $700 billion?

Hell, print $1.4 trillion and split it right down the middle--half for wall Street and half for main street.

[seasat]

8. Because we should get most of the money back.

While I'm not confident that we'll make a profit and will be happy if we break even, the bill will likely not cost us 700 billion. The securities that we're buying are not valueless and will be sold once the real estate market recovers. The bill calls for some recovery of money through warrants for equity in the firms. Unless the problem is much more serious than what we're seeing now, we should recover most of the money through those two options. However, if it is serious enough that we lose all the money used to invest in these securities, then the loss of 700 billion will be drop in the bucket compared to the crash that happens.

[Alcibiades]

10. Print the $700 billion instead of borrowing it

There's no reason to be paying interest on something such as this.

[Virginia Dare]

9. Too many give aways to the thumb suckers on the right...

they're giving more tax breaks we don't have the money for. This compounds our problems instead of helping them.