In recent days, congressional negotiators amended the Treasury Department's original proposal to add new oversight powers and conditions that would protect taxpayers.
Early Sunday, congressional leaders announced they had reached agreement on key elements of the plan and that staff were writing the final language. The full House of Representatives and Senate must both ratify the plan.
Below are key elements of the rescue plan:
The $700 billion in buying power would be doled out by Congress in stages. After the first $250 billion is authorized, the President could request another $100 billion. The final $350 billion could be cleared by a further act of Congress.
- Washington will take a stake in companies helped through the program so that taxpayers can share in the profits if those companies get back on their feet.
- A new congressional panel would have oversight power and the Treasury secretary would report regularly to lawmakers in two elements of a multi-level oversight apparatus.
- Compensation limits would be set for the chiefs of participating firms to prevent excessive pay and "golden parachutes" for those who might tap government aid and then quit.
- The federal government may stall foreclosure proceedings on home loans purchased under the plan.
- Alongside the plan to buy securities outright, the Treasury Department will conceive an alternative insurance program that would underwrite troubled loans and would be paid for by participating companies.
- If the government has taken losses five years into the program, the Treasury Department will draft a plan to tax the companies that took part to recoup taxpayer losses. (Reporting by Patrick Rucker; Editing by Tim Dobbyn)
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