Frank Bill Aims to Put Limits on Wall Street Bailout « The Washington Independent
Using lessons from the initial phase of Washington’s $700 billion Wall Street bailout, House Financial Services Committee Chairman Barney Frank (D-Mass.) introduced draft legislation today applying much stricter conditions on how the remaining $350 billion will be spent.
Under the bill, banks benefiting from the taxpayer gift must provide quarterly reports detailing where the money is going. The bill also reins in executive compensation, prohibiting bailed-out banks from giving bonuses to their 25 highest-paid employees (up from five), and bans golden parachutes. A provision that’s sure to put the fear of god into any number of Wall Street employees, the bill would install a “clawback” mechanism to retrieve any compensation that was based on “materially inaccurate statements.”
Housing advocates will be pleased to know: The legislation would require that between $40 billion and $100 billion of the remaining funds go to prevent foreclosures — a spending target that the Bush administration has been loathe to pursue. Under the bill, the Treasury Department will have until March 15 to devise a foreclosure mitigation plan.
The House is expected to vote on the bill next week. Expect some watering down by the Senate.