Yes, BOTH senators voted YES to pass the bills that is lacking (abbreviated):

1. THE PLAN MISSES THE KEY ISSUE – WE SIMPLY GIVE MONEY BACK TO WALL STREET AND CROSS OUR FINGERS THAT SUCH FIRMS WILL RETURN LIQUIDITY TO MARKETS. Financial institutions who receive government support are under no obligation whatsoever to use such funds to provide liquidity to the financial markets. Thus this aid package fundamentally misses the real problem and may not provide liquidity of trading we need. Instead, such financial institutions could simply distribute the cash to shareholders and partners, and provide no further help to the economy.

2. TAX LOSS CARRYFORWARDS WILL MEAN THEY DO NOT ACTUALLY PAY TAXES. Importantly, any tax levy in 5 years on troubled financial institutions will be avoided by such bailed out firms. Financial institutions holding troubled assets will incur TAX LOSSES today from the sale of such assets to government and thus will be exempt from paying taxes for very long periods of time as a result of tax loss carryforward rules (the amount of such tax losses will depend upon how they originally accounted for the assets in their financial statements – some firms may record massive tax write downs). In fact in 5 years they may still have sufficient tax shelter from the sale of these troubled assets that they will not be subject to the special tax on financial institutions. Ironically, the financial institutions that avoided these troubled assets and thus did not incur tax losses will be the ones who carry the burden of the new tax since they will not have tax shield available.

3. The total exposure of government is possibly $ 3.131-TRILLION – well in excess of $ 700 bn since this is simply an upper ceiling on the maximum outstanding at any one time (per notes on page 40 of the Act). The plan is designed to absorb substantially more troubled assets – as government sells such assets the proceeds from sale can then be used by the Secretary to buy more troubled assets. This establishes a “revolving” loan facility which can be used over and over again to buy troubled assets and then sell such assets. The true exposure of government debt is illustrated by the requested increase in the statutory limits of total debt allowed. This new bill requests to increase the allowed debt by $ 3.131-trillion (from $ 8.184-trillion to $ 11.315-trillion, per pp. 68, line 8). See http://www4.law.cornell.edu/uscode/html/… for current wording and limit on government debt.

4. Credit card loans and car loans that are secured by a home loan (very common in USA) are included in the bail out package. See pp. 14, line 18. Any type of purchase on a credit line secured by a home can be acquired or guaranteed by the government. Since such loans are very common this means virtually any type of debt can be taken over by the Secretary. This package goes well beyond subprime mortgage loans.

5. There is practically no cap on what a financial institution can sell to the government. The cap has been set at $ 100,000,000 (pp 38, line 24). Thus a small number of big-time offenders can dump their bad debts onto government. If it is only a small number of firms that hold large amounts of such paper then the government should consider allowing them to fail. Government intervention is appropriate to stop systematic broadly-based risk. Not a handful of firms. The private sector could easily buy up a handful of firms with such troubled assets (e.g. JP Morgan easily absorbed WaMu and other institutions like Barclays are seeking opportunistic acquisitions)

6. There is no clarity on the type of deals the Secretary can structure. He has a free hand to deem what is appropriate – even if such deals are not at fair market value. pp 35 line 10 outlines the mechanism for how government takes an equity or debt position in the selling financial institution. Importantly, there is no mention or requirement for the Secretary to use fair market value in determining the value of debt bought by the government. As mentioned earlier the selling financial institutions can flip debt acquired from other struggling financial institutions to the government. There is no consent requirement for the Secretary from any oversight committee. Suggested improvements:
(a) Have Secretary establish fair market value for consideration paid when buying, insuring or guaranteeing troubled assets.
(b) Have Selling/insured financial institution indemnify government against any and all losses resulting from the troubled assets bought, insured or guaranteed. Thus the downside risk of loss will be mitigated.
(c) Have government receive equity participation IN ADDITION to the indemnification.
(d) Place limitations on distributions/dividends to shareholders until the loans are repaid. There is no limitation on dividends and other distributions to partners/shareholders from the financial institutions. Repayment of government obl
Sugar: how so?