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| The $700bn will be doled out in stages [AFP] |
The proposed $700bn rescue package will be released in stages, starting with $250bn followed by an additional $100bn upon the president's request, if necessary. The remaining $350bn will need further approval by congress.
The government will own shares in participating companies, allowing taxpayers to benefit should the firms become profitable in the future, except small firms with less than $500m in assets, or where the government buys less than $100m of soured investments.
The government will be among the last to suffer a loss in case a firm collapses.
A new congressional panel with wide powers will oversee the implementation of the rescue package, with regular progress reports from the treasury secretary.
Trouble loans
A salary cap will be imposed on senior executives while those hired after a company offloads more than $300m in assets will not be eligible for "golden parachutes", or contracted benefits upon termination of employment.
A study will also be carried out to gauge the impact of accounting standards largely blamed for the steep decline in the valuation of assets on corporate balance sheets.
The government will draw up an alternative insurance scheme to underwrite troubled loans to be paid for by the affected financial iinstitutions.
It can also begin paying interest on bank reserves and stall foreclosure proceedings on home loans to ease credit strains.
If the government has taken losses five years into the programme, it must draft a plan to tax the companies that took part to recoup taxpayer losses.
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