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Emergency Economic Stabilization Act
Aired September 28, 2008 - 15:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
ANNOUNCER: This is CNN BREAKING NEWS.
ALI VELSHI, CNN NEWS ANCHOR: I'm Ali Velshi live at "Issue No. 1" headquarters in New York. This is a special emergency edition of YOUR MONEY. We are following negotiations in Washington. Let's go now to Senator Judd Gregg, Republican of New Hampshire talking about the progress on this bailout bill.
SEN JUDD GREGG (R), NEW HAMPSHIRE: ...dislocation or proportions that we've never seen. And that prompt and effective action is absolutely necessary. Not only to stabilize the credit markets, but more importantly to guarantee the prosperity on Main Street, make sure that paychecks can be delivered, make sure that people can borrow money, buy cars, send their kids to school, add on to their house and generally do the things you do when you use credit.
This is about Main Street. It's about America. It's about -- it's really about the whole fabric of American life when you get down to it because it's about the commerce of America and the effect that a huge dislocation would have on the personal effect and obviously the financial effect. So, the importance of accomplishing something here that hopefully will mitigate such an event is -- can't be overstated. And I think it's because of that and because of the fact that everybody in the room who is working on these issues, who had been asked to come by their leadership and the leadership that was there, and of course Secretary Paulson under knew -- understood fully the real crisis that we face and that action had to be taken.
And as a result, the negotiations, although they went on for an extraordinary period of time and were very actively pursued by all the participants, were -- I felt, anyway, that everybody in that room had one purpose, and that was to get something done to address this issue. And I was actually extraordinarily proud to be part of the Congress and to be participating with the secretary of Treasury and the White House in this, what amounted to, even though it may have not looked like a joint effort -- joint effort to get there and make sure we did something to address this issue.
So, what was the results? Well, I think the results were what we needed to accomplish. We have given the secretary the authority and the resources and the flexibility necessary, that he feels is necessary, and of course he's the one that has to make the call, to hopefully be able to go forward and stabilize the credit markets and free up the credit markets.
What you all understand has happened here, let me explain again for folks that are watching, is that the credit markets are locked down because of something called mortgage-backed securities, which is a term of ours that means basically people borrowed money on their homes and then that money that was borrowed, the notes got passed around as people borrowed on those notes. Those mortgage-backed securities, a large percentage of them have no value today or can't be valued -- they don't have no value, they can't be valued today because the value of the assets have dropped so significantly and therefore it's not clear whether the mortgage exceeds the value of the house.
And in addition, because of this subprime event and the cheap money that was out there and that allowed subprime to happen for so long, subprime borrowing, a lot of people are finding their rates resetting at levels that they can't afford to pay the mortgages.
So, these large tranches of assets basically can't be valued. The practical effect of that is that the institutions which own these, the financial institutions can't lend money because their balance sheets are out of whack and they don't have the resources to move into new lending. And in addition, because of some of the things that have happened in the market and other places, such as the Lehman event, there's no confidence in the market that you can move money around any longer and get your money back, because nobody knows what the security values are, what the value of the security that supports the moving of money is. So, these issues have caused the market to basically start to lock up and that's the real problem. If the credit markets melt down in Wall Street, Main Street melts down a few days later.
The -- therefore, our goal was to give the secretary the authority, the resources, and the flexibility to pursue a program, which will hopefully take off the books of some of these financial institutions, debt which cannot today be valued, assets -- remember, we're buying assets here, which cannot be valued, and then the federal government will basically create a value for those assets by purchasing them and then as the market stabilizes and as people and as the economy gets back to normal, or at least the credit markets get back to normal or more normal status, we can begin to resell those securities into a stabler market, which means that we'll probably be able to sell them for a higher value than what we paid for them, or at least that's the expectation of most of the really smart people who seem to know this issue pretty well.
So, it is not $700 billion -- you know, you've heard all this hyperbole in the press -- not the press, I'm sorry. Not the press, it's not the press. You heard all this hyperbole by some folks who speak to the press about -- and a lot of it's theater and a lot of it's about personal aggrandizement about how we're take $700 billion worth of taxpayers' money and throwing it at Wall Street. That simply isn't true.
What we're doing is investing in vehicles that will have value to the taxpayer in an attempt to free up credit so that working Americans can get their paycheck and can survive in this economy and enjoy the quality of lifestyle and prosperity that we've had historically had. And so if we are successful in this effort, and I obviously hope we are, Secretary Paulson will settle out the markets -- the credit markets with this very significant resource of borrowed money, of taxpayers' money, and with the settling out of the market, we will be able to get into a more orderly system and we'll start as we sell this paper off to recover the dollars that we have laid out -- tax dollars which we have laid out. And we may lose some money, we may break even, or we may make some money. My gut tells me we're going to make money as taxpayers.
The negotiations -- I didn't perceive them as partisan, to be honest with you. I perceived them as breaking into two different thematic efforts -- one was the desire of the Treasury secretary to have as much flexibility and have the authority and resources he needed to do the job that he's done to free up the credit markets. The other was members of Congress and the Treasury secretary wants to be sure that the taxpayers were protected, that people didn't walk out of this making a windfall of money, that people were able to stay in their homes to the best extent possible, and that we had adequate oversight of the secretary...
VELSHI: All right, you're listening to Senator Judd Gregg, Republican of New Hampshire announcing that they have a deal. In fact, a bill has been sent up to the committee and the people working on this. I've got a copy of this in my hand now. It's a 106-page bill called the "Emergency Economic Stabilization Act of 2008." Judd Gregg says it gives the Treasury secretary the authorization, the authority, and the flexibility to free up credit markets. We are still pouring through this to see what's in it. CNN's Kate Bolduan has been following the development of this on Capitol Hill.
Kate, this is the announcement they said they would have and now we have a bill. What's the story, there?
KATE BOLDUAN, CNN NEWS CORRESPONDENT: Well, we've been waiting for this bill. This is all coming to fruition after that late-night meeting. You see Senator Judd Gregg, that we were just listening to, he was there, he was there for the big announcement that they had reached a verbal agreement. All throughout the night, then, the staffs were trying to draft that verbal agreement into actual legislative language. And so now, as you have right there in your hand, Ali, this legislative language that now the members, the lawmakers, and of course, these negotiators, they're going to pore through and they're going to start proofreading or vetting and make sure everybody is onboard or trying to get people onboard, so they can have this broad, bipartisan support for this $700 billion deal that we've been talking about for 10 days, now.
VELSHI: Kate, this is a very complicated deal, where I'm trying to sort of go through it as we speak. But, Senator Judd Gregg has really made a point that we have not heard put -- as fine a point put on and that this is not a Wall Street bailout, this is a Main Street -- this is a Main Street piece of legislation. He's trying to make the point that people's salaries and jobs and loans are entirely connected to this.
This, of course, has been the operative part of trying to this get this negotiation done, because we've had two sides on this, some saying that taxpayers are not protected enough, and another saying that we shouldn't be bailing out Wall Street. Who won here? BOLDUAN: Well, it's a delicate balance that it seems these negotiators have been trying to strike. As we heard from Judd Gregg, and we've been hearing a lot, you need to free up the credit which is in Wall Street in order to help Main Street, because as Judd Gregg told me this morning, he used the idea of trying to get a car, he's like, you need this credit in order to get a car.
So, I think what they're trying to do is give a hard sell and trying to prove to the American public that this isn't about Wall Street, this is about Main Street, but at the same time, you do have other lawmakers, specifically these House conservatives we've been talking about who are opposed to the bailout because they say it doesn't protect taxpayers enough. So, this is a delicate balance that these negotiators are trying to strike in order to get everyone onboard, because, as Senator Dodd said earlier today, I don't like it, but we have to do it, this is the best of the worst.
VELSHI: All right. And which is to say, Kate, while we have a bill in our hands, and by the way, we haven't finished printing this out, it's still coming, 106 pages, it doesn't mean it's a done deal. Judd Gregg did say we've given the Treasury secretary the authority and flexibility he needs, but the bottom line is he doesn't have that authority and flexibility until this is passed.
BOLDUAN: Exactly. And that's -- there's a lot of political arm twisting that's going on right now trying to get people to say they are onboard in order to vote for this. First has to go to the House, whenever they vote on it and they finish it up, then it will go to the Senate. We're getting time lines that range from everything from early Monday or into Wednesday because they have to take a break for the Jewish holidays, so we'll see where this goes, but they're going to be pushing hard now to get everyone onboard, you can tell.
VELSHI: Kate's going to stay on this. We're all staying on this story to give you some sense of what's going on. They said they'd have legislation to us before Asian markets open tonight. They did get us some legislation. We're going to go through it and tell you what's in. You can log on to CNNmoney.com to see it yourself. We're going to post a link to it. We're going to be back after this break to break it down to you, what this bailout means to you, your mortgages, your job, and the economy. This is a live, special emergency edition of YOUR MONEY.
VELSHI: And you're listening -- or you're watching -- you're looking at Senator Judd Gregg, a Republican of New Hampshire, announcing that Congress has reached an agreement on a bailout deal. I'm Ali Velshi. You're watching a special emergency edition of YOUR MONEY. We have in our hands this deal that they have put together. It's 106 pages and CNN is pouring over it right now to determine what this means to you.
This bill was promised to us this afternoon so that before Asian markets opened, there would be a chance for markets to react to the idea that there is a deal and that that might stop the flow of bankruptcies and failures that we've been seeing in our financial system.
The short title of the bill that we've got in our hands is called the "Emergency Economic Stabilization Act of 2008" and one of the main -- in fact, the first part of this act is a clause that reads: "The secretary of the Treasury is authorized to establish a troubled asset relief program to purchase, make, and fund commitments to purchase troubled assets from any financial institution on such terms and conditions as determined by the secretary and in accordance with this act and the policies and procedures developed and published by the secretary."
Judd Gregg characterizes this as having given the Treasury secretary the authority and flexibility to free up the credit markets that have frozen up and have caused businesses in America to be unable to borrow money to continue their operations. We have seen this happen just most recently with Washington Mutual, the biggest failure of a bank in history.
Now, we do not have a vote on this legislation. This is legislation that was agreed to overnight, worked on today, writ10 into this 106 pages and we're trying to figure out exactly who won and who lost in this, because there were two sides in this issue. Some who thought taxpayers weren't protected enough and those who had got10 into trouble with their mortgages were not protected enough.
Others on the other side opposing this, saying that there shouldn't be any bailout for people's bad mistakes, particularly Wall Street's bad mistakes. Obviously, over the last 10 days, we've seen this effort derailed and come close to fruition a few times, it now looks like there is broad agreement on Capitol Hill or at least enough agreement one assumes to get this voted on and passed so that the Treasury secretary can act on it.
So, we have full coverage of this story. We've got Kathleen Koch at the White House. We've got Poppy Harlow at CNNmoney.com. We've got Susan Lisovicz, who is covering the market response to this. Let's go to Money.com anchor, Poppy Harlow, first.
Poppy, I don't know if you've had a chance to look at it or to gauge your reaction to this yet?
POPPY HARLOW, CNNMONEY.COM: Yeah, I mean, all our producers are pouring through this right now. Let's go through some of the key elements -- $700 billion, that is not going to be allotted all at once. What it looks like we're going to see $250 billion immediately. Remember when Pelosi announced this first, about two Thursdays ago, she said, time is of the essence, they're acting expeditiously here. A hundred billion more on top of that would have to go through President Bush, to him to get $100 more. Then, if we want to see the second part of it, that $350 billion, the second part, that would have to involve some other kind of approval by Congress for that.
Also, it does look like this is trying to limit foreclosures, stave off more foreclosures. We know housing is at the crux of this. And there does seem to be some limit on executive compensation. What you've heard the media referring to as "golden parachutes." The details of that we're still pouring through, but they want to get this started as quickly as possible, and it does include a lot of the things that Congress was expecting after midnight last night after they had that breakthrough, as they've been calling it -- Ali.
VELSHI: All right, very good.
Susan Lisovicz, the Congress had sort worked very hard on a deadline that they had imposed on themselves to try and get some broad agreement out before Asian markets open tonight. Now, you work in markets all the time, is that even relevant and are we likely to see a positive reaction to markets as a result of this agreement?
SUSAN LISOVICZ, CNN NEWS CORRESPONDENT: Well, Ali, I think there's two answers to that question. One is that I think, yeah, there may be a relief rally. After all, there needs to be some sort of confidence restored in the credit markets to free up capital that is needed for day to day lending, for such basic things as upgrading, expanding, making payroll. That is something that will help the economy here in the U.S. and will help the global economy.
On the other hand, this is a whole new era we're entering. One of the reasons why we got to where we are is deregulation. You know, there was a really interesting article in "Barron's" today, where -- it was a letter, a fictious letter from Wall Street to Washington. It's like, If we're drunk -- we at Wall Street are drunk, you, Washington, are enablers. And what you're going to see is a whole lot more oversight, I would think.
I'm looking at these chapters, haven't read them yet, (INAUDIBLE) more than a hundred pages. One chapter is "Market Transparency," another one is "Oversight and Audits," another one is "Congressional Oversight Panel." So, I think there's going to be a lot more hands on. This is, you know, after all, $700 billion, putting taxpayer money at risk and so I think you're going to see a whole lot more oversight and that's understandable. And I think there's going to be a lot handwringing day to day, but the bottom line is I think markets will be happy to know that something is getting done and hopefully lenders will start lending again.
VELSHI: All right, we're all reading this as we go along. And don't worry, to those of you out there, it's not just the three of us who are doing this, we have a team here and in Washington going through this detail, page by page. We're going to check in with the White House, we're going to check in to start -- reaction in London, we're going to check on reaction all around the United States and most importantly, we are getting down to what this means to you. We've been telling you for the last 10 days that a deal is imperative for the ability for you to get paid and get money for your loans. We're going to break this down and tell you what you gained and what you've potentially lost out of this deal. You're watching a special live emergency edition of YOUR MONEY. We're coming right back.
VELSHI: I'm Ali Velshi. You're watching a special emergency edition of YOUR MONEY. We have news now that the Congress has agreed to a broad deal that authorizes the Treasury secretary to start releasing money to free up the credit system, $250 billion to start with. Now, this hasn't been voted on, but there has been broad agreement after a marathon negotiating session overnight that has involved pretty much everybody who could be even peripherally involved in this.
We are pouring through the details, right now. The bill is 106 pages long. We've got our team of money experts working on this and our team of political experts in Washington. Let's go to one of they will right now. Kathleen Koch has been following the White House's involvement in this. She's there, now.
Kathleen, what's led to this and how does this deal look, so far?
KATHLEEN KOCH, CNN NEWS CORRESPONDENT: Well, let's first of all just look back at where we started. This is what they got up on Capitol Hill some 10 days ago, Friday last week, all of three pages. And obviously, now, this is what we're dealing with, you know, some 106 pages. And lawmakers obviously realized when they received that that there were a lot of blanks to be filled in. And so that is what they have set about doing over the last 10 days.
And obviously important to point out, the president and the administration has a lot at stake, here. The president has personally been out there lobbying for this. He had his prime-time address to the nation, he had the very divisive meeting in the White House with the members of Congress, the two presidential candidates there were things nearly exploded, this nearly all fell apart. The Treasury secretary, himself, involved in these meetings up until the wee hours of the morning on Capitol Hill this week. But, all in the firm belief that, again, this isn't just for Wall Street, this is for Main Street and if they didn't do something, that the nation's entire financial sector could collapse -- Ali.
VELSHI: Tell our viewers we're getting information in, Jeanne Sahadi and our CNNmoney.com team are pouring through this as we all are to find out what's going on. And I want to tell you some of the provisions they have arrived at, that you were just talking about that were so contentious, what some of the provisions in this bill are.
The $700 billion that the White House asked for will be dispersed in stages, $250 billion will be made available immediately for Treasury's use. Curbs are going to be placed on the compensation of executives at companies that sell mortgage assets to the Treasury and among those curbs, companies that participate will not be allowed offer golden parachutes to executives and they will not be able to deduct the salary that they pay to executives over $500,000.
And Kathleen, as you know, that was one of the earliest and first sticking points. Also, an oversight board, which is something that Democrats have insisted upon is going to be created, the board will consist of the chairman of the Federal Reserve, that's Ben Bernanke, the Securities and Exchange Commission chairman, Christopher Cox, the Federal Home Finance Agency director, and the secretary of Housing and Urban Development. So, these are things that we are getting as we're pouring through this. Kathleen, it almost seems like all of the objections that the Democrats wanted have been included in this, but we thought that a few days ago. We thought we had broad agreement, and then the whole thing fell apart, as you said.
KOCH: Well Ali, you really hit there on the three main points that I was going to mention that the administration had really objected to. Now, I must say, when it comes, though, to the oversight board, the Bush administration gave way pretty quickly on that. They understood that you really couldn't just have one individual, right now Henry Paulson, but in four months could very well could be someone else, you couldn't have one individual with that kind of power, that kind of unfettered power with absolutely no oversight. So, they were fine that.
Again as you mentioned, limiting the pay and bonuses of the executives of these companies, very problematic to them. Also, doing this in tranches, they wanted to do this as part of one comprehensive package. But, the Democrats did have to give way as well. There was one measure that they were pushing hard for on that they had actually tried to push in other legislation in both the Senate and House in the past that had failed there already and that was getting bankruptcy judges the ability to basically rewrite the terms of a homeowner's mortgage and lower that mortgage so that they wouldn't go into foreclosure. That did not become a part of this. So, the Democrats had to give way on a few measures, too.
But Ali, important to point out, no one is celebrating, here. Eight days ago in the White House, in the rose garden, the president said, you know, he's a market guy, this was not -- this was against his instinct. His instinct was to let the market work. Treasury secretary said basically the same thing before Congress. He said he was frustrated to be there, asking for this kind of authority, but they say this is what they've got to do to rescue the economy.
VELSHI: Yeah, this is one of the most pro-market, you know, not very regulatory administrations in recent history and for them to have been pushing that, that question here, Kathleen, is how are they going to bring along those people whose votes they need, particularly, that contingency of conservative Republicans who are market guys, who don't think that this deal should have been done at all?
KOCH: Well, it's going to be very tough, Ali. They're going to obviously keep pushing their firm belief that this is something that has got to be done or else. And you just don't want to go to the point of the "or else." They're obviously also going to be targeting lawmakers who are not up for re-election, those who don't have to face the voters in November, because therefore if the voters are extremely unhappy, as polls seem to show most of them are with this plan, they don't face the possibility of being tossed out of office.
VELSHI: This is going to be hard to sell to get this vote done. It's going to be hard to sell to the American people. Kathleen Koch, stay with us along with our political team and our money team. I want to tell you one more piece of information as we're pouring through this that we've just found in this legislation. Again, we are doing this just like everybody else. We're going through it and our team is finding points that are of relevance. This legislation will allow for the Treasury to receive the option to take ownership stakes in companies that participate under certain circumstances. You understand that there was a lot of --
VELSHI: You're watching breaking news. I'm Ali Velshi and this is a special emergency edition of YOUR MONEY. Because we have had word now, we know that there has been a bill presented with respect to this bailout. This is the bill right here a 106 pages long. It is called the Emergency Economic Stabilization Act of 2006. And CNN is poring through it right now to bring you details. It authorizes the treasury secretary to spend $700 billion starting with a $250 billion trance to try and stabilize credit markets around the world.
I'm joined by many members of the CNN team, but right now we've got Susan Lisovicz, who covers markets for us here in the United States. We've got Poppy Harlow, anchor at CNNMONEY.com. We've got Richard Quest, who's usually in London, he's in Los Angeles. Richard, we will be seeing the reaction to this bill on international markets long before we see it tomorrow morning at 9:30 Eastern in New York. You've got your finger on this. What's happening around the world right now? Are people digesting this and what do they think?
RICHARD QUEST: They always knew, Ali that a bailout package was going to be done. It was merely a question of when the deal will be done and how much damage would take place before they would dot the I's and cross the t's. To put it into perspective, it is 12:30 on the western pacific United States, but it is already 8:30 at night in Europe. It is early hours in the morning in Asia.
Of course, the first markets that will we'll really get to see put this bailout bill to the test will be coming up in New Zealand and in Australia. That will be in the next three or four hours. Really, Ali, as you wait to see how U.S. markets react, just follow the sun. It will go from New Zealand to Australia, across to Tokyo, Hong Kong, Singapore, Russia, a terribly important market, which has been frozen, closed, in turmoil. The Moscow Market in recent weeks. Then it's the major European bosses, Frankfurt, Paris, and the big boy of them all, London. And then we hand it back to you.
VELSHI: Richard, here's the thing. These markets, these places you just talked about don't have an underlying sub prime mortgage crises in them, but it's a sign of how intertwines we are that they will all respond. The fact is, credit has frozen at the highest levels around the world. The entire world is feeling this pain that the U.S. has been feeling. So they needed a result. They're probably not as concerned about the particulars as we are here in the U.S. They want to know that the credit markets will be free, deals can be done, companies can get the operating money that they got and continue to pay salaries.
QUEST: They do not give a flying about the question of executive pay, oversight, and whether the U.S. taxpayer makes a profit in the end of it all. They don't care a jot about that. What they want is the lubrication of U.S. taxpayer money to move swiftly into the machinery of the credit markets. They want those toxic assets off the books of the banks. And don't forget, that sub prime rubbish is now infesting the balance sheets of banks around the world. So yes you'll have a credit Suisse that will be wanting to get rid of its U.S. toxic assets, but that will affect what's happening in Zurich. You'll have an HSBC or a Royal Bank of Scotland. You're quite right. They don't care about the detail, they just want the dosh.
VELSHI: OK Richard you will stay with us. Thanks very much, Richard Quest. Susan Lisovicz as Richard said, as we watch the sun rise and market reactions over night, we'll then arrive back at you tomorrow morning at 9:30 Eastern at the New York Stock Exchange. What we may see, Susan is that there are deals that have been frozen for the last ten days that may start going through. We may see start an influx of money flowing tomorrow if they are evil enough, the ratification of this deal just on the understanding that as Richard said the lubrication of that money is now into the financial system.
LISOVICZ: I think that everyone is on the same page as the fact how vital the credit market is and that it's frozen. Having said that, I don't think that anyone thinks that everything is going to suddenly be wonderful and we're going to go back to great economic expansion of the '90s. The U.S. economy, the greatest economy in the world, is decelerating. The housing market is a mess. We've lost jobs every month this year. Consumers are having problems paying their bills.
Unfortunately, more homeowners are going to enter into foreclosure. A lot of that won't change. What will change if this works is that things won't get a whole lot worse is that businesses, consumers will have access to Capitol. And the pendulum that swung from one extreme to the other will just back up a little bit. You know, we went from money for everyone, cheap, available, no, we don't need to see your income, no, and we don't need to see your credit history, even to really prime customers being denied. Now, hopefully that will modify a bit. And yes that confidence may be restored. And you may see it in the markets. Of course, what we'll be watching in particular is how financial companies trade. These financial stocks have been hammered, which further exacerbates their already weakened position, Ali.
VELSHI: All right. We are continuing to pore through this, Susan. You'll stand by. Richard will stand by. Poppy Harlow from CNNMONEY.com is there. Kate Baldwin is live on Capitol Hill. We have our entire CNN Money team. We are poring through this $700 billion plan. This is it, 106 pages long. We are pulling those bullets out. You can check in with CNNMONEY.com. As we go through it with you, we'll check in on this special live emergency edition of YOUR MONEY. Stay with us we are coming right back.
VELSHI: All right. You're watching breaking news right here on CNN. I'm Ali Velshi. You're watching a special emergency edition of YOUR MONEY. We have a deal on Capitol Hill. This is it, 106 pages long, authorizing $700 billion in expenditures to try to free up the credit markets and get us out of this financial turmoil that we are in. We are poring through this. If you want to pore through it with us, you can go to CNNMONEY.com where a link to this legislation is posted. We are firing away with interpretation as we go through this.
We've got a full, full team of people working through it. I want to tell you some of the major points we have found right now. Number one, the $700 billion that the White House has asked for will be distributed in stages, starting with $250 billion being made available immediately. Number two; there will be curbs on executive compensation at companies that participate in this deal by selling their toxic mortgages to the treasury. Those companies will not be allowed to offer golden parachutes to their executives and they will not be allowed to deduct the salary that they pay them above $500,000.
An oversight board will be created. This is something that was very important to the Democrats. An oversight board will be created. The board will include the chairman of the Federal Reserve, Ben Bernanke. The chairman of the Securities and Exchange Commission, Christopher Cox, who you'll remember is the one that John McCain said he would fire. The head of the Home Finance Agency and the head of the Housing and Urban Development, the secretary of Housing and Urban Development. Those people will form part of an oversight board. We have full coverage on this. Let's go to Poppy Harlow, anchor at CNNMONEY.com. Their team is here in full force trying to pore through this. Poppy, what is this looking like? Is this giving the taxpayer the assurances that we were looking for?
HARLOW: That's the big question, right? You're using $700 billion of taxpayer money. Will taxpayers lose on this, will they benefit from it? Let's to section 114 of that 106-page document that we're all poring through. It's talking about the pricing of these and the transparency. What essentially they're asking for is that the amount of assets, what the assets are that the treasury buys and at what price, that all has to be disclosed to the public within a matter of two days in electronic form. .
That is so that people can know what the assets are so that they can have an understanding, because we're dealing with assets that the treasury secretary right now is calling ill liquid. They don't know the value that is the whole reason they want to get them off the books of the banks so the banks can loan the money that people need to get loans from everything from homes, to schools, to cars. It looks like there's going to a huge amount of transparency here for people to see exactly what the treasury is doing. So this is in addition to that oversight board, Ali. They really want the public to be fully aware of every step that's taking place.
VELSHI: There have been great stories on CNNMONEY.com which has explained what the connection is between what has come to be called by some a Wall Street bail out and you, the average American. And in addition to bailing out banks that have got bad mortgages on their books, what a lot of people hasn't understood is that many American companies depend on lines of credit and bank loans in order to meet operating expenses like rent or even salaries. And that too has frozen up. Just like it's hard for Americans to get more credit right now, it's frozen up for many banks. And that has endangered American workers at some of these companies that may not be able to raise money. This is actually very connected to the average American. This isn't just some sort of Wall Street fat cat bailout. HARLOW: No. That's exactly right. And the house Republicans were calling for a Wall Street workout. They want Wall Street to be on the line. But I think Judd Gregg said it really well. He said Main Street melts down a few days later if you let Wall Street collapses. That's because small business owners to big banks rely on this credit being available. We're an entrepreneurial people and Americans really rely on having this access to cash. I think Susan said it well earlier when she said there was easy money in the '90s; you don't have to show your worth, et cetera, to get these loans.
Now, obviously, it's a lot harder, but it's almost impossible for some people to get loans these days. And I think he said it well, Judd Gregg, when he said, Main Street melts down a few days later, we cannot let this happen on Wall Street. It's not just a bailout of Wall Street.
VELSHI: And our colleague, Tom Ziegler has indicated to me, one thing that we want to make clear, as we are all working through this together while it says at the bottom of the screen a moment ago that it would sort of eliminate these golden parachutes, it limits them. It doesn't really eliminate them. There are always ways around this. If a company wants to pay a CEO a lot of money, they can do it in different ways. They cannot take the tax write-off; they can give it to them in stock or do different things. So we have not achieved what some people wanted to achieve and that is somehow a total elimination of golden parachutes or high executive pay, but there's been some language in there that is obviously satisfactory to all those people involved that we've come some distance with that, if that were your goal.
HARLOW: And we have to remember, Ali, the people at the top of these firms, yes, they did lead some of these firms into the ground. We've seen investment banks disappear. Look what happened to Lehman. But at the same time, a lot of people argue, you have to pay for top talent. And these people know the inner workings of these Wall Street institutions. Some of them have been there for years and years and years. And when we look at treasury secretary Paulson, he ran Goldman Sachs. That was a lot of people's argument that this guy knows the inner workings of Wall Street. I think they want those top minds there at some of these institutions.
VELSHI: OK, Poppy. You are staying on this, so is the whole team. There's another piece of information that we want to -- we're just trying to fully understand before we give you all of the breakdown as to how this effects you, but there are a lot of people in this debate who said, we want the ability for taxpayers to take ownership in some of these companies that we're bailing out, so at the back end when this thing starts to work properly, taxpayers not only recover their money but are able to profit from it. There's a provision in here that allows taxpayers or the treasury under certain circumstances to take an option of buying a stake in the companies that are being bailed out. We'll get to the bottom of that and tell you how taxpayers might, just might end up making some money out of this.
We're set to check in with Jessica Yellin. She's part of the best political team on television. We've got our CNN Money team standing by to break this down for you. You can go to CNNMONEY.com and look at that for yourself a $700 billion dollar deal, it is long, and it is 106 pages long. We're going keep breaking it down for you. More details on this and what it means to you. You're watching a special emergency edition of YOUR MONEY right here on CNN.
VELSHI: I'm Ali Velshi you're watching breaking news here on CNN. Congress has come to an agreement on this bailout package; I'm holding it in my hand, 106 pages long. You can follow along with it if you want. We posted a link to it on CNNMONEY.com. There's some major points including the $700 billion that the White House is being granted. Starting with $250. There will be oversight of this. An oversight committee. There will be some executive compensation limitations and there might be an ability for the taxpayer to own some of the companies that are being bailed out.
Before we continue with this discussion. I want to tell you something else. If you go to CNNMONEY.com you may be following a story that we've been following a few days. The next bank that is thought to be looking for a buyer is Wachovia. There's a lot of speculation that Wachovia is in discussion over the weekend with potential buyers. We are waiting to find out what this bill will include before concluding a deal. We're following that story very closely as to whether there will be any development with Wachovia. If you bank at Wachovia we'll keep you posted as to what that means for you. I want to go to Jessica Yellin who is now in Detroit. She's been traveling with the Obama campaign, and also been very tuned into what's happening with this negotiation. Maybe, Jessica, you can give us a sense if this is a done deal that we are treating it as?
YELLIN: It is still a little bit dicey. A little bit of work to be done to nail down especially the house Republicans to see how many of them are on board. There's still some concern that elements among house to Republicans are dissatisfied with this. Some have come out saying they don't like it because it's not the roll of government to bail out Wall Street. Now some people obviously will be opposed to it. The question is how many of the more moderate can they get on board. That's what they are working right now.
The current thinking is there will be a vote on this bill in the house tomorrow, sometime midday or even early afternoon. Then Congress is going on recess for a day for the Jewish holiday. Folks will be out of town and not back until Wednesday morning. That's when they are currently thinking the Senate will vote on Wednesday morning on their version of this bill.
Now, a little bit of whipping has to be done. The general sense is despite concerns that there are holdouts; nobody really wants to be the party that held up the bill that could save the financial markets since it's been cast that way. So politically it's difficult to oppose this. And they think that both houses will go along, Democrats and Republicans but still some work to be done.
VELSHI: It was looking like a Wall Street bailout much easier to stand in the way of it. I want to ask you about the candidates. I know you're about with Obama campaign. I also want to tell our viewers how we are covering this because if you're sitting there wondering how this bailout will affect you it may not be clear. We have a full team. We have our political team. We have Kathleen Koch at the White House. We have Jessica Yellin there in Detroit. We have our CNN Money team as well.
We have Poppy Harlow from MONEY.com here, we have Suzanne Liscovicz who covers markets, and we have Richard Quest who covers European markets. We're fully covered on this and we got our entire CNN money team pouring through this 106 page document to find out what your protections are, what your exposure is and what this is going to do. We're also going to cover markets as they start to open in Asia through Europe and then into the United States. Jessica, have we heard from the Obama campaign yet on where they stand on this deal?
YELLIN: We've heard from both campaigns today and they were consistently briefed on what is contained in the bill. So they essentially are commenting on what they were told is in the bill not since the final or this draft has witness out. But what we hear from Obama is that he's likely to support the bill. He's particularly pleased that there's a measure in there that protects the taxpayers as representative Manuel, one of the leaders in the house on the Democratic said say it makes CEO have some skin in the game. That's something Obama wanted to see. Since I told you that some of the house Republicans has some concerns and I just got an email telling me that yes in fact they do, John McCain is a little bit holding his cards closer to the vest. We do expect him to be on board eventually.
VELSHI: Is there a chance that there's enough house Republicans uncomfortable with this that it could be scuttled?
YELLIN: Not to tank the bill. There are enough votes to pass it. The concern is Democrats don't want this to be a Democrat bill. They want enough house Republicans signed on to make it everybody's problem if it's a problem.
VELSHI: Jessica stand by I want to just give our viewers a sense of what is in this bill so far. Its 106 pages. Remember that the first one that was sent up to Congress by the White House was three pages. This is 106 pages long. It is very detailed. It is called the Emergency Economic Stabilization Act of 2008 and it is designed to give the treasury secretary the flexibility and the authority to insert money into the financial system so that banks and other companies can borrow from each other to maintain their operating expenses.
In many cases that mean the salary that you're paid. It says in the bill on the first section, it is to establish a troubled asset relief program to purchase and make and fund commitments to purchase troubled assets from any financial institution on such terms and conditions as determined by the secretary and in accordance with the act and the policies and procedures developed and published by the secretary. It's going to make $250 billion of the $700 billion available immediately. There are some curbs placed on executive compensation. Limits on executive compensation. There will be an oversight committee that will include the chairman of the Federal Reserve, Ben Bernanke, the chairman of the Securities and Exchange Commission Christopher Cox. The Federal Home Finance Agency director and the secretary of the Housing and Urban Development.
There are also provisions in there to allow treasury on behalf of the government and taxpayers to take ownership stake under certain circumstances in some of the companies that are being bailed out and we are also, as we go through this document finding information that treasury may be able to establish some sort of insurance program. Again this is a 106 page bill. If you want to look at it go to CNNMONEY.com. We have a link to the bill. You can look at the very same draft that I'm looking at here. It's long. Not all that complicated but very long.
We also have full coverage on CNNMONEY.com and we will continue our coverage here on CNN as we determine what the points in this bill are that affect you, your ability to borrow money for your car, your home, your house, your ability for your company to continue to get money and to continue to operate. We'll follow this story. Thank you for being with us. BALLOT BOWL is up next. You're watching the best political team in television be sure to log on to CNNMONEY.com. You'll find a break down of the bill. If you want to read the bill yourself, you'll find a link to it right there lots of great information for you at CNNMONEY.com. The CNN money team and the best political team in Washington will continue to follow this story and what it means for you and your bottom line. This is a special emergency edition of YOUR MONEY. BALLOT BOWL starts in just two minutes.