The text – of the late and unlamented deal

Here’s the text of the deal to which everyone, but a number of House Republicans, apparently, agreed last night.

UPDATE – notes on a Treasury call to most favored investors:

1) If even the Treasury is saying tranching is a formality, then it really is nothing. Not sure why Dems fought so hard for a fig leaf.

2) Waiting a couple of weeks because no one has any idea when or where the next bomb will blow up. In other words, all their doomsday scenarios about Black Monday were B.S. They screamed the check had to be written by Monday, but now they’re saying they actually have a few weeks before they need to cash it. Plus, this will allow them to “seek guidance” from GS, JPM, and other selfless public servants about where the money should be funneled.

3. The tap dancing is because they don’t want it to get out that they’ll be giving a sweetheart deal. The public won’t be following each individual transaction to see exactly what price is being paid. So ridiculously overpriced asset sales can be hidden in the details, and by the time some reporter (or blogger 🙂 combs through and analyzes the transactions, the deed will have been done. But if Paulson makes a statement that assets will be bought at par before the bailout’s even begun, that will be reported and might kill the deal.

4. In other words, we need to sweeten the pot to encourage banks to come “voluntarily”. Pardon my ignorance, but why the hell should we be begging banks to borrow from us? I thought a bailout should be the absolute last option for a bank. I.e., it should be so unpalatable, so unprofitable for a bank and its executives that they exhaust every private means of survival before coming for their public “reaming”. I wonder if foreclosed homeowners would rate their foreclosure process as “user friendly”.

5. Of course the exec comp provisions are a joke. Who do you think is going to be hiring all those banking cmte staffers and newly retired congresspeople next year during the inevitable post-election turnover? Do you really think they’re going to vote to limit their salaries? Remember that for lots of people on the Hill (including elected reps), govt work is merely time you spend accumulating credentials in preparation for your real life’s work in the vastly richer private world.

UPDATE II – 226 against to 207 for. It’s dead for now. But how long will it take Wall Street to convince Washington to pull a Brussels and start the vote-until-you-get-it-right process? My guess is that since stomping their feet didn’t work, now they’ll try holding their breath, in other words, doing their best to bomb the markets before swooping in with another emergency plan.

The question is, how much leeway do they have?

UPDATE III – There’s our answer. It’s the Brussels option. Congressman Boehner just declared “We need to renew our efforts.” Question: can America get a restraining order on these jokers? No one is going to come around simply because Wall Street’s representation has gone all stalkery on us.