NY Times allegedly has some details:
The Obama administration’s new plan to bail out the nation’s banks was fashioned after a spirited internal debate that pitted the Treasury secretary, Timothy F. Geithner, against some of the president’s top political hands.
In the end, Mr. Geithner largely prevailed in opposing tougher conditions on financial institutions that were sought by presidential aides, including David Axelrod, a senior adviser to the president, according to administration and Congressional officials.
Mr. Geithner, who will announce the broad outlines of the plan on Tuesday, successfully fought against more severe limits on executive pay for companies receiving government aid.
He resisted those who wanted to dictate how banks would spend their rescue money. And he prevailed over top administration aides who wanted to replace bank executives and wipe out shareholders at institutions receiving aid.
Because of the internal debate, some of the most contentious issues remain unresolved.
On Monday evening, new details emerged after lawmakers were briefed on the plan.
It intends to call for the creation of a joint Treasury and Federal Reserve program, at an initial cost of $250 billion to $500 billion, to encourage investors to acquire soured mortgage-related assets from banks.
The Fed will use its balance sheet to provide the financing, and the Federal Deposit Insurance Corporation might provide guarantees to investors who participate in the program, which some people might call a “bad bank.”
A second component of the plan would broadly expand, to $500 billion to $1 trillion, an existing $200 billion program run by the Federal Reserve to try to unfreeze the market for commercial, student, auto and credit card loans. A third component would involve a review of the capital levels of all banks, including projections of future losses, to determine how much additional capital each bank should receive.
The capital injections would come out of the remaining $350 billion in the Troubled Asset Relief Program, or TARP.
A separate $50 billion initiative to enable millions of homeowners facing imminent foreclosure to renegotiate the terms of their mortgages is to be announced next week.
Some of President Obama’s advisers had advocated tighter restrictions on aid recipients, arguing that rising joblessness, populist outrage over Wall Street bonuses and expensive perks, and the poor management of last year’s bailouts could feed a potent political reaction if the administration did not demand enough sacrifices from the companies that receive federal money.
The depressing thing for me about this is that even after spending months reading almost every story I can find about this, after compulsively following Calculated Risk and Naked Capitalism and inviting folks like Nour Rhoubini and others into my home, I still have only a passing understanding of what is going on. I’m not the smartest person on the planet, but I am not Dough Feith stupid, yet every time I look at this stuff it doesn’t take long before I am in over my head. This stuff has become so hopelessly complex, with so many interlocking relationships, that even if you assume everyone is acting in good faith, it is difficult to make sense of it all. Factor in the sad reality that a lot of people in this sector appear to be incapable of acting in good faith, and there is no chance that the average person can understand what is going on.
On the other hand, I do understand this, and it is terrifying:
I was there when the secretary and the chairman of the Federal Reserve came those days and talked to members of Congress about what was going on… Here’s the facts. We don’t even talk about these things.
On Thursday, at about 11 o’clock in the morning, the Federal Reserve noticed a tremendous drawdown of money market accounts in the United States to a tune of $550 billion being drawn out in a matter of an hour or two.
The Treasury opened up its window to help. They pumped $105 billion into the system and quickly realized that they could not stem the tide. We were having an electronic run on the banks.
They decided to close the operation, close down the money accounts, and announce a guarantee of $250,000 per account so there wouldn’t be further panic and there. And that’s what actually happened.
If they had not done that their estimation was that by two o’clock that afternoon, $5.5 trillion would have been drawn out of the money market system of the United States, would have collapsed the entire economy of the United States, and within 24 hours the world economy would have collapsed.
More here, where the possibility of martial law was discussed. The whole thing makes you feel helpless, to an extent. This clearly something that is so important that it could shake the foundation of our society, yet it is so hopelessly complex that you are powerless to understand it, let alone take control of the situation.
*** Update ***
Many folks wonder why I have soured so much on the Republican party (not folks that still read and comment here, mind you, but every other day I get an email from someone wondering why I went “insane” or telling me that I have gone “nuts,”), and this is a good time to explain why. Watch that Kanjorski video, and tell me it does not scare the hell out of you. Then remember that it was in that context, with that in the background, that the then Republican nomineee, with his sidekick Sarah Palin, engaged in a series of stunts regarding the bailout, suspending his campaign, resuming his campaign, babbling about cancelling the debates, all while the House GOP played their little games, ending in this:
Watch the Kanjorski video again, think about that context, then watch John Boehner go in front of the cameras and say they voted against the bailout because Nancy Pelosi was mean. There was a loaded gun pointed at the head of the American economy, and the Republicans were bitching about the color of the uniforms worn by the SWAT team there to rescue them.
I don’t think it is nuts to have soured on the GOP. I think it is nuts to support them.