Bailout needs Major Strictures, or no deal

Secretary Paulson, who let's not forget is a former chairman of Goldman Sachs and thus one of the foxes, wants a "clean bill" on the proposed 3/4 trillion bailout. Democrats need to say, "Your plan, as is, is DOA, sir, fuhgeddabout it!"

The bill, at minimum, needs to have the following provisions:

• Any company applying for bailout must turn over substantial equity, to be sold later to pay down the debt, and must agree to be bound by strictures.

• Among those strictures must be:
- Strict caps on executive compensation and severance
- Right of government oversight, including audit and dismissal of executives found to have breached fiduciary duties.
- Mandatory refinancing of principal home mortgages up to a certain amount (say $750,000) held by securities instruments
- Preferential treatment of small investors in any liquidations
- Cap individual capital loss write-offs over a certain amount; those who profited before should bear the loss now; no more privatization of profit and socialization of loss
- [I'm sure there are other things that will come up; the main point: Paulson says this shouldn't be punitive: like hell. This should hurt those who caused it.]

• Some of the $700 billion needs to come not from just raising the debt ceiling, but taxing the richest. I would say a tax surcharge on the top 1% would be in order, with a fixed duration, of ten years or something. (Mainly because the richest segment will be getting a tax increase soon anyway to help get the Federal Government on something resembling a sound footing going forward).

• Britain has a small tax on securities transfers, and it hasn't exactly gone belly up as a result; we should impose one too, to help pay for this.

• Some of the $700 billion needs to come from offsets. This can't practicably be in the bill itself, but at least the principle should be. (I would target unnecessary large weapons systems. This is especially important because the Bush administration has been saying for years that there's no money for infrastructure or health care reform, but suddenly there's $700 billion for this. So, if there is going to be infrastructure development and health care reform as well, we need to restructure spending to find the money for all this.)

• Some of the $700 billion needs to come from windfall profits tax on oil profits for three years. This could be in the bill itself, since otherwise it might be impossible to pass.

• No bailout of sovereign wealth funds.

• Understanding that major reregulation is part of the quid pro quo. The Gramm Leach Bliley Act will be repealed, the Glass-Steagall Act will be reimposed; etc. (Not literally, perhaps, but the laissez faire system that caused this debacle will be trashed).

Again, I'm sure there are other provisions that need to be put in the mix, but these will do for starters.

Why, when we can't bailout individual families losing their homes, or small businesses, or manufacturing, do we always seem to have plenty of socialism to save Wall Street? The reason is simple: they have us over a barrel, and the barrel is fear. Fear that the whole house of cards will collapse. OK, that's the reality. But the interests of those other than in the financial sector need to be front and center now.