Following are the major details of the $700 billion rescue package that congressional negotiators approved on Sunday as reported by the AP:
- Provides up to $700 billion, starting with an initial $250 billion, to allow the Treasury Department to purchase troubled assets, mainly in the area of mortgages, that are weighing down the U.S. financial system.
- Gives the Treasury Department, working with experts chosen by the government, the authority to fashion the asset purchase program. Treasury officials have suggested that a key approach will be the use of 'reverse auctions' in which financial firms who succeed in selling their assets to the government will be the ones willing to take a lower price than other bidders.
- Restrictions will be imposed on the pay and benefits received by executives whose companies are selling some of their bad assets through the government's purchase program.
- The Treasury would be required to provide details of its purchases within two days of the transactions and various oversight boards would be created to monitor the operation of the program.
- Taxpayers would be given ownership stakes in companies whose bad assets are purchased. After five years, if the government is facing a loss in the program, the president will be required to submit a plan recommending how the money can be recouped from financial companies.
- Establishes a program whereby banks could buy government insurance that would cover the principal and interest on certain troubled assets, rather than selling them outright. Premiums will vary depending on the assets' risk profile.