Respect the Dodd

I think there's a general consensus that Chris Dodd's plan for this bailout is a much better place to begin, although in this one, details matter.

WASHINGTON -- Senate Democrats want to add tough new measures to the Treasury Department's proposal to bail out financial firms, including strict limits on executive compensation and a provision that would allow the government to take shares of any financial institution that participates in the program [...]

Sen. Dodd's plan would not allow the Treasury Department to purchase any assets "unless the Secretary receives contingent shares in the financial institution from which such assets are to be purchased equal in value to the purchase price of the assets to be purchased."

Treasury officials have not suggested that the government would receive any shares of companies that sell distressed assets into the huge government fund.

Democrats are also expected to clash with the Treasury Department on a separate provision that could limit executive compensation at firms that participate in the program. Sen. Dodd's plan would limit the pay "to exclude incentives for executives to take risks that the Secretary deems to be inappropriate or excessive." It would also allow limitations to senior executives as it is "determined to be appropriate in the public interest in light of the assistance being given to the entity."

The draft would also create a special inspector general program and a separate emergency oversight board, which would include top officials from the Federal Reserve, Federal Deposit Insurance Corp., and Securities and Exchange Commission.

The Politico has another take, and Calculated Risk has questions for President Paulson.

In general, taking a stand on CEO compensation is good from a moral perspective as well as good for the economy - circulating all that wealth into the hands of the few is really unadvisable. This may be where Bush takes his stand and I say let him - I have no doubts who will come out on the right side of that argument in the minds of the American people. Bush talks about "punitive measures" as if making rich CEOs who ruined companies get along without billions of dollars in golden parachutes is somehow punitive. That won't sell with the public. I also like the idea of grabbing some equity for the taxpayer out of this.

Dodd's plan was stronger than his rhetoric on the morning shows. The market went way down and oil prices shot up $20 (mainly because speculators think a rescue will increase economic activity and energy demand) today, and the White House will clearly try to use that to pressure Democrats into supporting their no-strings plan. But Dodd and Barney Frank are in control here, and I think they're listening to their constituents on this one. You have what amounts to a nearly $2 trillion dollar bailout, with major add-ons over the weekend to include foreign banks, mortgage lenders, student loan operators, practically every shaky piece of debt in the country. That's just a giveaway, a raid of the US Treasury, and it needs to be rejected wholesale. In this environment, President Paulson can ask for whatever he wants - but the ace in the hole on the side of Democrats arguing for better conditions are we the people.

I would urge you to call your Senator and tell them that Sen. Dodd's plan is much closer to what needs to happen than a blank check for President Paulson. I tried both of my Senators, and Feinstein's line was busy while Boxer's mailbox was full. That's a good sign, actually, people are pissed off about this and letting their leaders know. CNN's emails today were running 100% negative.