• The Heritage Network
    • Resize:
    • A
    • A
    • A
  • Donate
  • Text of the Bailout Legislation

    The following language was circulated on Capitol Hill this morning as Treasury’s plan to purchase residential or commercial mortgages. Heritage released eight goals and strategies that should guide lawmakers during the debate this coming week.

    LEGISLATIVE PROPOSAL FOR TREASURY AUTHORITY TO PURCHASE MORTGAGE-RELATED ASSETS

    Section 1. Short Title.

    This Act may be cited as ____________________.

    Sec. 2. Purchases of Mortgage-Related Assets.

    (a) Authority to Purchase.–The Secretary is authorized to purchase, and to make and fund commitments to purchase, on such terms and conditions as determined by the Secretary, mortgage-related assets from any financial institution having its headquarters in the United States.

    (b) Necessary Actions.–The Secretary is authorized to take such actions as the Secretary deems necessary to carry out the authorities in this Act, including, without limitation:

    (1) appointing such employees as may be required to carry out the authorities in this Act and defining their duties;

    (2) entering into contracts, including contracts for services authorized by section 3109 of title 5, United States Code, without regard to any other provision of law regarding public contracts;

    (3) designating financial institutions as financial agents of the Government, and they shall perform all such reasonable duties related to this Act as financial agents of the Government as may be required of them;

    (4) establishing vehicles that are authorized, subject to supervision by the Secretary, to purchase mortgage-related assets and issue obligations; and

    (5) issuing such regulations and other guidance as may be necessary or appropriate to define terms or carry out the authorities of this Act.

    Sec. 3. Considerations.

    In exercising the authorities granted in this Act, the Secretary shall take into consideration means for–

    (1) providing stability or preventing disruption to the financial markets or banking system; and

    (2) protecting the taxpayer.

    Sec. 4. Reports to Congress.

    Within three months of the first exercise of the authority granted in section 2(a), and semiannually thereafter, the Secretary shall report to the Committees on the Budget, Financial Services, and Ways and Means of the House of Representatives and the Committees on the Budget, Finance, and Banking, Housing, and Urban Affairs of the Senate with respect to the authorities exercised under this Act and the considerations required by section 3.

    Sec. 5. Rights; Management; Sale of Mortgage-Related Assets.

    (a) Exercise of Rights.–The Secretary may, at any time, exercise any rights received in connection with mortgage-related assets purchased under this Act.

    (b) Management of Mortgage-Related Assets.–The Secretary shall have authority to manage mortgage-related assets purchased under this Act, including revenues and portfolio risks therefrom.

    (c) Sale of Mortgage-Related Assets.–The Secretary may, at any time, upon terms and conditions and at prices determined by the Secretary, sell, or enter into securities loans, repurchase transactions or other financial transactions in regard to, any mortgage-related asset purchased under this Act.

    (d) Application of Sunset to Mortgage-Related Assets.–The authority of the Secretary to hold any mortgage-related asset purchased under this Act before the termination date in section 9, or to purchase or fund the purchase of a mortgage-related asset under a commitment entered into before the termination date in section 9, is not subject to the provisions of section 9.

    Sec. 6. Maximum Amount of Authorized Purchases.

    The Secretary’s authority to purchase mortgage-related assets under this Act shall be limited to $700,000,000,000 outstanding at any one time

    Sec. 7. Funding.

    For the purpose of the authorities granted in this Act, and for the costs of administering those authorities, the Secretary may use the proceeds of the sale of any securities issued under chapter 31 of title 31, United States Code, and the purposes for which securities may be issued under chapter 31 of title 31, United States Code, are extended to include actions authorized by this Act, including the payment of administrative expenses. Any funds expended for actions authorized by this Act, including the payment of administrative expenses, shall be deemed appropriated at the time of such expenditure.

    Sec. 8. Review.

    Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.

    Sec. 9. Termination of Authority.

    The authorities under this Act, with the exception of authorities granted in sections 2(b)(5), 5 and 7, shall terminate two years from the date of enactment of this Act.

    Sec. 10. Increase in Statutory Limit on the Public Debt.

    Subsection (b) of section 3101 of title 31, United States Code, is amended by striking out the dollar limitation contained in such subsection and inserting in lieu thereof $11,315,000,000,000.

    Sec. 11. Credit Reform.

    The costs of purchases of mortgage-related assets made under section 2(a) of this Act shall be determined as provided under the Federal Credit Reform Act of 1990, as applicable.

    Sec. 12. Definitions.

    For purposes of this section, the following definitions shall apply:

    (1) Mortgage-Related Assets.–The term “mortgage-related assets” means residential or commercial mortgages and any securities, obligations, or other instruments that are based on or related to such mortgages, that in each case was originated or issued on or before September 17, 2008.

    (2) Secretary.–The term “Secretary” means the Secretary of the Treasury.

    (3) United States.–The term “United States” means the States, territories, and possessions of the United States and the District of Columbia.

    Posted in Scribe [slideshow_deploy]

    58 Responses to Text of the Bailout Legislation

    1. Pingback: Text of the Bailout Legislation

    2. andrew howard chicag says:

      Number Eight seems like a "cover-up of the bail-out" and the ink is not yet dry. In the midst of utter collapse who need's such a shield in advance. People joke about how the United States is not like Russia, however when did we start acting like the Chinese.

    3. Joe Klein, Del Rio, says:

      This knee-jerk half-baked "bill" is completely ridiculous. With so much at stake, this looks like something a high school class would come up with. If Congress actually even considers giving their power of the purse to this unscrupulous bunch they will pay dearly in Nov. at the ballot box. Too much authority to Treasury. This has been a growing theme with both Treasury and the Fed for months. This is a shameful Scam at the highest levels of Government.

    4. Pingback: Blayne Sucks » Blog Archive » No Pain, No Gain

    5. Darvin Dowdy, Houst says:

      I agree w/Joe Klein. This is happening way too fast as if they're trying to rams this through before folks have a chance to debate it & get the facts. Here's New Gingrich on the subject:

      http://corner.nationalreview.com/post/?q=ZGE5MmE0

      DD

    6. Pingback: The Bailout Bill: A Threat to Constitutional Rule » Undiplomatic

    7. Pingback: On Bailouts | Bearing Drift :: Virginia Politics and Podcasts

    8. Pingback: The Corner Office mobile edition

    9. Commissioner2010 tam says:

      This draft legislastive is a scam in the making. How unconstutional is this piece of legislation. The same people who caused such chaos, and near depression are the same people who will beneift from ADMINISTRATIVE FEES. These firms at Goldman and Morgan don't need a bailout when they will have hugh pay days. The administration continues to have its way. I'm sure they scammed the Democrats into believing this let down is bigger than it really is. What a finally curtain call for George W. Bush.

    10. David Lawson, Liber says:

      Obviously, this is only the opening phase and I trust that Section 8 will be unrecognizable from above. I do hope that this proposal doesn't create more problems than it solves. And finally; Any guesses to total number and value of earmarks that will be added?

    11. Pingback: Squatters@Home » Don’t Forget to Read Section 8

    12. Steve from Maryland says:

      I suppose that the insertion of the provision limiting judicial review were motivated by two concerns: (a) personal liability of the government officials exercising the discretion to purchase; and (b) litigation impeding the orderly implementation of the act. The Doctrine of Sovereign Immunity would seem to address the first concern, but the second concern is more problematic. Certainly if a court issued an injunction, it could throw a wrench into the works. On the other hand, if the Court lacked the authority to issue an injunction (an Anti-Injunction Provision which is not unheard of) then the remedy would be limited to money damages against a recipient. But whose remedy? The Chinese curse has come to pass: we are living in most interesting times.

    13. Pingback: Read the Fine Print | Real Central VA

    14. Pingback: Interesting bit about the bailout bill - Super Off Topic Syndicate

    15. Fred James says:

      "The sky is falling". "Your money or your life". The language justifying this bailout is the rhetoric of scare tactics. This proposed legislation should also include a crown and a sceptre for the Secretary. Nobody can review his stuff. This credit crunch was caused by the market. The market's remedy for financial worry is bankruptcy court. If this bill is passed, president Obama will have little or no financial discretion to do health care or anything else. NO BAILOUT!

    16. Pingback: Aren't you concerned about section 8 - yes that's about as - TDR Roundtable

    17. Pingback: Frau Jott’s absonderliche Worteleien … » Blog Archive » Globaler Kollaps oder wat nu?!

    18. Alluvial says:

      No. Just…no.

    19. Pingback: jason fager -

    20. prison for Paulson says:

      "Section 8 of the proposed plan says: 'Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency."

    21. Phil, Detroit MI says:

      The Secretary is authorized to take such actions as the Secretary deems necessary to carry out the authorities in this Act, including, without limitation:

      (1) appointing such employees as may be required to carry out the authorities in this Act and defining their duties;

      Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.

      Sounds like the Secretary would have the power to raise and army and go to war if he thought it "required to carry out the authorities in this Act." Of course, we can trust that he would not go so far.

      It is astonishing that this piece of used toilet paper is considered the starting point for a serious discussion. In a reasonable world, it would be grounds for impeachment.

    22. Daerin the Cluer says:

      This bailout could be thought of as a form of class warfare. Bush, after fighting for a huge tax cut that only benefits the rich, wants to use tax dollars, now collected mostly from poor and working-class people, to shoulder the burden of finance capitalists' bad investments. Thus, instead of a few rich people losing their ass, we all lose our asses while they get to stay rich.

      This is yet another example of what Noam Chomsky calls "socializing risk and costs," which is always accompanied by "privatizing profit."

    23. Campbell, Michigan says:

      In Section 3, the priorities are skewed. #1 should be to protect the taxpayer. #2 disruption of banking/commerce.

      In Section 8, deleting entirely the lack of accountability and prosecution clause. These people/organizations should and NEED to be held responsible for their actions.

      The time limit should be no longer than 1 yr. and the maximum cap should not be left open to reapply for another 70000000000000 when they come calling for more because of underestimating.

      Actually this should be completely defeated, not just amended. However, if I read correctly, the house has already approved it in July 2008 and now it has gone to the Senate.

      How is it the media slept through the original house bill? Could it be they were too interested in the Clinton/Obama candidate race?

    24. Peggy McGilligan, Na says:

      The bailout is the swan song of Wall Street fat cats, who presided over the predatory capitalism of the past decade. When Bill Clinton eased banking restrictions in California, he dished out $8-billion dollars for "community reinvestment loans.” The money just evaporated. Undoing regulations sets a precedent, as does "comping" real estate. With the influx of cheap capital $500,000 buys a modest home. When the “creative financing” schemes fell through, as is their wont whenever 30-million Mexican nationals buy inflated properties and default, it left banks around the world in the lurch (see global economy). Never mind that the aforementioned demographic is the new face of the Democratic Party; their mortgages morphed into “toxic” financial instruments, which Congress itself cannot quantify. It’s a $90-billion bailout at best. Hillary Clinton knew who’d get the loan giveaways. Interestingly, had Hillary prevailed; she, instead of Barack Obama would be negotiating the bailout. So, why should hardworking Americans perpetuate the housing bubble? Why write the bubble boys a blank check? Why pony up a trillion-dollars, as a cost of doing business? Because it’s a scam! And, this is the exit strategy. Where is that $8-bilion dollars? The bubble is the problem, let it burst.

    25. Freddie Mae says:

      My car insurance quote is longer than this document. This is supposed to save our nation from certain doom? We are all living in La La land if they are serious about the failure of our economy if this doesn't pass NOW. Let's dump the dollar and go back to tally sticks… Seems more stable.. or better yet start trading seashells and turtle tails.

      You have to be smokin crack to pass this.

    26. Brett Bowton-Meade, says:

      Anyone check out the Section 10 reference to Title 31, 3101? Currently the borrowing limit of the US is $8 Trillion. What does this country need the additional $3 Trillion for if this deal is only $700B? Why raise the allowable debt by 38%?

      Secondly, check the definitions in Section 12: 'any securities, obligations, or other instruments that are based on or related to such mortgages'. That means a buy-back of the failing underlying assets in already securitized bonds, mortgages that are already off the books of the failing investment banks. These are held not only by large US institutions but also foreign governments. You guess which ones – not just China, think big foreign oil.

      This scam is about preserving wealth and making those bad investments good. A guaranteed return for unnamed financial giants via an upward redistribution from the US tax payer.

    27. Ann Z Cox says:

      This bill is packed with earmarks–Bill Manders read some of them yesterday, SHOCKING! We have to be crazy to allow our congressional members to pass this in ANY FORM!! I was up until after 1 AM last night writing every senator I could!! This is a monster and we will be truly sorry if it is passed. The other scary thing: should Barack be elected you can see how your dollar will be spend by Pelosi and Reid. Reid sure has no class!! His spiel today was disgusting.

      Peggy McGilligan, National Capitol Area sure had it correctly! She said let it (Wall St Bubble) burst and I say, no vote, no bill, let it ride. It can't be worse than this draft or any bill Congress will shove down our throats. Ann in Carson City, NV

    28. don thor, ridgfield says:

      pass a bill. get reelected. hope the explosion happens next year.

    29. Charlie Burke says:

      Understand latest "bailout-bill" has earmarks . . . there should be NONE. No bailout, maybe loan the money with repayments required.

    30. Pingback: Secret bailouts coming? - Homeland Stupidity

    31. Me, Here says:

      Write your congress people and senators! Go to http://www.senate.gov and http://www.house.gov and make it clear that our money is not for anybody to take without transparency of the transaction.

    32. Pat Johnson says:

      If current members of congress want to keep their jobs they should not pass this legislation. I am sick of bailing out the same crooks over and over. What about the American people? As usual we get the shaft.

    33. Jim Rowell, San Anto says:

      This should be a hand up-Not a hand out. The far left wants to give our taxpayers money away, and this should not happen. Loaning money to stabalize the enconomy is the only way that we can insure that this will work. As far as taxing businesses, businesses DO NOT PAY TAXES!! The consumers that use or buy their products pay the taxes!! They only pass the cost of operation down to us.

      God Bless America.

    34. Jean Weingartner Fl says:

      Yes I agree pay attention to #8 also We the people should be able to read everything they are planning to do before it is passed.I keep hearing transparancy but it seems they only want to either work behind closed doors or cover each others butts or tell us what they think we want to hear.I'm a big girl I want truth and I want to see people testify under oath and their are some that need to go to jail.It is sad when we lose trust in our government such as our congress,senators from both sides of the isle.All I can say is those who believe in GOD please pray for our country,Troops their families,our government officials that they do the right thing for AMERICA and its Citizens.

    35. billinsc says:

      why would you agree to buy the debt of people who don't pay their bills. This is a free pass for

      the irresponsibles. Vote no. Good luck collecting from dead beats and fraud commiters.

    36. BBub, NC says:

      Sounds like it's time to jump on the bandwagon….get a no down mortgage (any interest rate will do), don't pay a penny, and let the taxpayers foot the bill for my new home. Sweet!

      And if you whinny taxpayers complain enough about that, the gov will then threaten to force us mortgage defaulters into the streets. That's just not the Communist, or Socialistic way.

      I"m in!

    37. Eunice in Tn says:

      Chrysler was given a billion (+/-) dollars with no curtailment of activities that caused their problem (as best I can determine). Since that time we've lost most of our industrial capacity which s necessary to provide stable jobs (sports, entertainment,advertising or tourism can provide a few permanent jobs but mostly temporary, part time or day jobs). Thirty years later we're (taxpayers) are being "asked" to give nearly 1000 times a billion without regulations to prevent recurrance. Will the "next one" cost 10,000 billion?

    38. Sharon Pine says:

      It seems that politicians from both parties, and especially Dodd and Frank got us in this pickle and are the ones in the negotiations? Isn’t that a conflict of interest? Sounds like same-old, same-old Washington politics instead of looking out for the average hardworking American. Obama leaving Washington to let others handing this important issue is CODE for "I have no idea how to fix this and do not want my name associated just in case it fails”.

    39. Pingback: Secret Bailouts Coming? « Dissent Mag

    40. Joyce Park, Illinois says:

      Sect. 4: Reports to Congres semi-annual. Change to upon authorization of $'X'

      Sect. 6: $7B at any one time…Can be repeated????

      Section 8 gives too much authority to the Secretary that is non-reviewable by anybody.

      Very 'loose' document. Vote "NO"!!

    41. jim middleton mass says:

      you've got to be kidding us,this bill is like bailing out the captain's ship and putting the water into the survivors row boats.that way they'll be sure we'll go under and there will be very few survivors. Sound familIAR, THE"TIATNIC" WOULD BE A GOOD EXAMPLE.

    42. mitzi c., alexandria says:

      Sec. 6. Maximum Amount of Authorized Purchases.

      The Secretary’s authority to purchase mortgage-related assets under this Act shall be limited to $700,000,000,000 outstanding at any one time

      Oh geez, this means that he can spend more than $700,000,000, just at different times. We're sunk!!!

    43. Mike, Canaan, NY says:

      This is totally BOGUS, and it will pass tomorrow despite the vast majority of the general public being against it. The voice of the little guy matters no more. I say, "Off with their heads come November!"

    44. James Weed says:

      Whether this bill helps the economy or not, it really only does a few things;

      1. Increase the debt limit

      2. Limit the spending to mortgage related assets.

      3. Limit the purchases to companies headquartered in US

      4. Give authorities to one individual (politically appointed) which are unprecedented and possibly unconstitutional.

      5. Cut the hamstrings of congress.

      Given this power and the precedence set by the current administration, what is to prevent the Secretary from overpaying for bad assets, allowing the companies involved to avoid these losses and up values. This would dramatically help the largest stockholders which are primarily the wealthy and the corporate officers. What a scam.

    45. john j engebretson t says:

      This bill needs more work. Earmarks and unlimited use of or follow of funds by secretary not by any court or judge.

    46. Fred Peel, truck dri says:

      Personally, I'm against this whole idea. Seems morally, ethically, and legally wrong. This much money and power vested in one (questionable) character, without assignable responsibility or oversight, poses extreme risks of various kinds.

      The Glass-Steagall act in 1933 worked very well until 1997. Put it back in place, and let the open market take care of the rest.

    47. Steve, Redlands, CA says:

      You have to skeptical anytime you see the following:

      Sec. 8. Review.

      Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.

      WHAT A SCAM!!!!!!!!!!!

    48. roger conary says:

      SO MUCH FOR OUR COUNTRIES SOVEREIGNTY AND ITS FLAG .NOT TO MENTION THE CONSTITUTION OF THE COMMON MAN (WE THE PEOPLE. ,OF , BY AND FOR THE PEOPLE )YOU KNOW THE ONES THAT WON THE AMERICAN REVOLUTION AND FORMED THIS GOVERNMENT, WROTE THE CONSTITUTION AND BILL OF RIGHTS TO PROTECT US FROM THE INEVITABLE DESTRUCTION OF MEGALOMANIACAL GREED.

      TELL YOUR CHILDREN TO WATCH OUT FOR THE THINNING OF THE HERD .

      PEACE AND LOVE

      ROGER

    49. Pingback: House Votes Down Bailout! - Page 6 - The Political Hotwire

    50. richard mcfeters, brighton ma. says:

      i have been reading the 1st part of this”bill”..you can take section 8 out completely….it says any decision made by the secretary is outside the law….and cannot be taken to court at anytime……you know where they can stick that….there are no oversites i this bill…no punitive action mentioned anywhere on any part of this bill ad, until such things remain outside of this bill it should not be passed by anyone…i realize the import of this bill…but to pull a no. out of thin air and not see if it is correct or not is a kid playing w/funny money!!!!!!!!!!!!!!!!!!!!!!

    51. Jody, Seattle says:

      I'm hopeful proposal, now passed, will do some good. They have to do something. But in the meantime, I found a hilarious song about it called "Bailout Man" to lighten a grim subject: Bail out song

    52. Kathleen says:

      We are screwed.

    53. matt, oregon says:

      All the comments I'm reading here are ridiculous. Once you all figure out what happens to the economy without this, or better yet, once you all stop complaining about the mess you created by doing these 100% loans yourselves, then perhaps you'll understand what's going on here. It's easy to complain if you don't have a solution yourself. Get a clue.

    54. Ray, Texas says:

      Where can a list of "earmarks" that were attached the the legislation be found?

    55. Pingback: Northwest Indiana Mortgages - FHA and Conventional: Government - empower and get out of the way

    56. Pingback: First Financial Trust Mortgage: What should be done to help mortgage markets?

    57. Pingback: Real Estate Blog - Government is a big part of the mortgage problem

    58. Tyler, Indiana says:

      I think we are going communist!

    Comments are subject to approval and moderation. We remind everyone that The Heritage Foundation promotes a civil society where ideas and debate flourish. Please be respectful of each other and the subjects of any criticism. While we may not always agree on policy, we should all agree that being appropriately informed is everyone's intention visiting this site. Profanity, lewdness, personal attacks, and other forms of incivility will not be tolerated. Please keep your thoughts brief and avoid ALL CAPS. While we respect your first amendment rights, we are obligated to our readers to maintain these standards. Thanks for joining the conversation.

    Big Government Is NOT the Answer

    Your tax dollars are being spent on programs that we really don't need.

    I Agree I Disagree ×

    Get Heritage In Your Inbox — FREE!

    Heritage Foundation e-mails keep you updated on the ongoing policy battles in Washington and around the country.

    ×