Understanding the Financial Crisis - Vi

http://www.treas.gov/press/releases/hp1150.htm

Key points of the Paulson Plan...

1. Goal - promote market stability, help protect American families, and help protect the American economy.
2. The root cause of our financial system's stresses are distressed assets. This plan addresses that problem by removing the distressed assets from the system.
3. With the distressed assets out of the system, money can flow to and from households and businesses to pay for home loans, school loans, and investments that create jobs.

As of Saturday afternoon the plan is:
1. Treasury will authorize 700 billion in treasury securities to finance the purchase of distressed assets.
2. The primary distressed assets to be purchased are: residential and commercial related mortgage backed assets, which may include mortgage backed securities and whole loans.
3. The Treasury Secreatary (in consultation with the Federal Reserve Chairman) has the authority to include other debts to purchase in order to stabilize financial markets.
4. The timing and scale of the purchases will be at the discretion of the Treasury Department and its agents.
5. The price of assets purchased will be established through market mechanisms where possible (such as reverse auctions). The purchase price of the asset will be used to determine if the purchases have reached the cap of 700 billion.
6. The Treasury has two years from enactment of this bill to make the purchases.
7. To qualify, assets must have been originated or issued on or before September 17, 2008.
8. The qualifying institutions must have significant operations in the US.
9. The Treasury Secretary (in consultation with the Federal Reserve Chairman) has the authority to expand the categories of qualifying institutions that will be eligible.
10. The assets will be managed by private asset managers at the direction of the Treasury.
11. Treasury may sell assets or hold until maturity.
12. Borrowing in support of this program will be subject to the debt limit, which will be increased by 700 billion (the US debt ceiling will be increased to 11.3 trillion dollars)
13. Daily Treasury Statement will include borrowing information
14. Treasury will report to Congress three months into the program and every six months after that.