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26 Sep

A Liberal’s Proposal On The Bailout

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Preamble

The problem is that no one knows the facts, neither the incompetents on Wall Street or Congress. The Bush administration definitely does not.
The Paulson Bail Out Plan has been described by Republicans as
Socialism. But it is not. It is closer to being Fascism. In this Plan are the following words:
“Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.”
Believing Congress has the sense to reject his and Bush’s plan I believe there will be a plan.  And to the Republicans and some Democrats I say “Welcome to the world of Socialism”.

I propose the following plan. I believe a plan is necessary to save the incompetents on Wall Street from themselves but also to save the common man’s homestead and what he or she has been able to save, looking forward to that day of retiring and enjoying life.

Critical to my plan are:

– It recognizes the immediacy of the problem.

– It gives time to develop real assistance for the common man
to keep his homestead.

– The election of Senator Obama as President and the election of a Democratic Congress. This is an imperative. The election of McCain Palin would be a disaster for the necessary intense monitoring of the plan and the implementation of rules and regulations to govern the financial markets. McCain has been the God of deregulation during his time in the Senate. Further his past corruption as a member of the infamous “Keating Five” and the subsequent Savings and Loan bailout must not be forgotten.
Obama would bring a brilliant mind to the undertaking and would surround himself with the best minds there are. To oversee the monitoring of the Plan I recommend persons such as Mayor Bloomberg and Warren Buffit.

The McGlynn Plan

All activities of the U.S. Treasury relating to the Plan are to placed and remain in a Trust Fund (Fund) with the sole purpose of the Fund to execute, administer and monitor the Plan until its demise. All funds, regardless of source, belong solely to the Fund and may not be used for any other purpose or other Government funding.

1.)  Immediate moratorium of 180 days on all foreclosures of a person’s homestead property whose outstanding mortgage is $400,000 or less.
A joint committee of Congress to be formed with the charge to report back to Congress within 90 days with recommendations of relief for such persons. I would expect the plan would include repeal of the changes to the bankruptcy laws passed under the Bush administration.

2.)  Immediate loan availability for those financial institutions holding major blocks of troubled mortgage securities with conditions on the loans as follows:

a.)  Interest at the five year treasury rate plus 3 % (adjustable every 3 months)

b.) Warrants for preferred stock issued to U.S. Treasury with terms as follows:

i) Preferred stock warrants are exercisable at the discretion of the U.S. Treasury with the amount of debt canceled owed to the U.S. Treasury equal to the amount of equity purchased at a price determined by the fair market value of the company

ii) Fair market value (FMV) of the company’s equity to be determined as of November 30, 2008. Such FMV to be determined excluding the debt owed to the U.S. Treasury.
FMV to be certified by a major auditing firm, such firm approved by the U.S. Treasury, and the FMV presented to the U.S. Treasury in the form of a balance sheet, with financial notes to the balance sheet with full disclosures of all contingencies which could have a material effect on the present or future value of the equity.

iii) Preferred stock is to be cumulative, participating and senior to all debt.

iv) Preferred stock to have an accumulated dividend rate of 12% compounded if unpaid quarterly

v) Preferred Stock to have:
Full registration rights: demand rights; “piggyback”; zero registration expenses; full transfer of rights and non-competition agreement with all executives.
Veto rights:  financings, acquisitions, mergers, sale and other disposition of assets, dividends, amount of stock issued, borrowing, leasing & compensation of executive staff

3.) Immediate representation of the U.S. Treasury on the Board of Directors of the company with full powers over the executive pay, the audit committee, the governance committee, and all rights enunciated under b (v) above.

Author’s further comment; It certainly is presumptuous of me to propose a plan. But what the Hell, I have the right. I would appreciate comments on this post. One, if they so wish, does not have to list their name, e-mail address etc. to comment.

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