Legal News

Tentative Bailout Agreement Struck: Bankruptcy Changes Still in Play

By Dan Slater

Treasury Secretary Henry Paulson briefs reporters, Sept. 19, 2008. (AP/J. Scott Applewhite)

The situation is changing by the minute, but we’d like to get you up to speed on the status of The Bailout Plan. WSJ is reporting that lawmakers have reached “a tentative agreement” on the $700 billion plan to bail out U.S. financial markets.

After a three-hour meeting, lawmakers agreed to legislative principles that would approve Treasury Secretary Hank Paulson’s request for the funds, but would break it into installments, according to people familiar with the matter. Treasury would have access to $250 billion immediately, with another $100 billion to follow if needed. Congress would be able to block the last installment through a vote if it was unhappy with the program.

As for limits on executive compensation at companies who take the bailout money, the WSJ reports that limits on exec comp, such as restrictions on “golden parachutes,” are still in the offing. Also unresolved is whether to include changes to the bankruptcy law that would give judges the right to change the terms of mortgages. Democratic Sen. Dick Durbin of Illinois made a plea for it to be included, even though many lawmakers and the White House are hotly opposed, notes the Journal.

Full post as published by Law Blog - WSJ.com on September 25, 2008 (boomark / email).