The Bailout Plan

Here are some excerpts from the plan announced by the Treasury last week to spend up to $700 billion to buy assets from financial institutions.

"Treasury will have authority to issue up to $700 billion of Treasury securities to finance the purchase of troubled assets."

What are the two reasons for doing this?

"to promote market stability, and help protect American families and the US economy."

What can the Treasury buy?

"Residential and commercial mortgage-related assets, which may include mortgage-backed securities and whole loans."

But, we can basically buy whatever we want:

"The Secretary will have the discretion, in consultation with the Chairman of the Federal Reserve, to purchase other assets, as deemed necessary to effectively stabilize financial markets."

We are only bailing out domestic financial institutions:

"Participating financial institutions must have significant operations in the U.S."

But, if we want to bail out foreigners, we will:

"...unless the Secretary makes a determination, in consultation with the Chairman of the Federal Reserve, that broader eligibility is necessary to effectively stabilize financial markets."

We will tell you what we are doing:

"Within three months of the first asset purchases under the program, and semi-annually thereafter, Treasury will provide the appropriate Congressional committees with regular updates on the program."

Because we know you won't understand it anyway.