By David Lightman and Margaret Talev
WASHINGTON — Congressional negotiators agreed Thursday on a sweeping $700 billion financial-system rescue plan that would provide strong supervision of the government bailout, give taxpayers a stake in any firms that benefit from it and limit the pay of their executives.
Leading lawmakers were to present the plan to members of the Senate and House of Representatives later Thursday and were optimistic about eventual passage.
The negotiators produced a one-page “agreement on principles” that includes:
— Funding. Treasury would be authorized to spend $700 billion, but would get only $250 billion immediately, with another $100 billion to be released once the Treasury secretary certifies the money is needed. The other $350 billion could be canceled if Congress passed a joint resolution of disapproval.
— Executive pay. The Treasury Department would “set standards to prevent excessive or inappropriate executive compensation for participating companies.”
— Taxpayer equity. Taxpayers could share in the profits of firms that benefit from the bailout as they return to financial health.
— Oversight. The legislation would establish a “strong oversight board with cease and desist authority,” as well as an independent inspector general who would monitor “the use of the Treasury Secretary’s authority.” The Government Accountability Office, Congress’ investigative arm, also would audit the use of bailout funds. Regular detailed reports to Congress on the program would be required.
— Homeowners. The agreement mandates maximum coordinated efforts to modify mortgages for homeowners at risk of foreclosure; requires loan modifications for mortgages owned by the federal government; and directs that a percentage of future profits go to federal housing funds.
— Judicial review. The government would be barred from “acting in an arbitrary or capricious manner or in any way that is inconsistent with existing law,” which ensures the possibility of legal challenges in court. The original administration plan would have prohibited judicial review.
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