(Reuters) - The Bush administration is proposing sweeping authority for the U.S. Treasury to buy up to $700 billion of mortgage assets, in a bid to end financial carnage on Wall Street. Below are key elements of the powers that would be granted to the U.S. Treasury Secretary under draft legislation being discussed on Saturday by key congressional leaders and top administration officials, a copy of which was obtained by Reuters: * Buy any mortgage-related assets, both residential and commercial, for a two-year period. The types of mortgage assets this could cover and how long the government could hold them is left wide open, as is how they would be valued. * Up to $700 billion in mortgage assets could be bought at any one time * Broad authority granted to decide how to purchase, manage and dispose of the assets, including setting up a special fund and naming financial institutions to work for the Treasury Department. * Assets must have been originated or issued before September 17, 2008, by a bank or financial institution with U.S. headquarters * The Treasury Secretary would be given these powers to ensure stability or prevent disruption of financial markets and to protect the taxpayer * No court or government agency could review the secretary's decisions. The secretary would report to Congress within the first three months and then twice yearly * The U.S. debt limit would be increased by $700 billion to fund the plan, to $11.315 trillion from $10.615 trillion. http://www.reuters.com/article/bondsNews/idUSN2046929920080920?sp=true
Text of Draft Proposal for Bailout Plan : LEGISLATIVE PROPOSAL FOR TREASURY AUTHORITY TO PURCHASE MORTGAGE-RELATED ASSETS Section 1. Short Title. This Act may be cited as ____________________. Sec. 2. Purchases of Mortgage-Related Assets. (a) Authority to Purchase.--The Secretary is authorized to purchase, and to make and fund commitments to purchase, on such terms and conditions as determined by the Secretary, mortgage-related assets from any financial institution having its headquarters in the United States. (b) Necessary Actions.--The Secretary is authorized to take such actions as the Secretary deems necessary to carry out the authorities in this Act, including, without limitation: (1) appointing such employees as may be required to carry out the authorities in this Act and defining their duties; (2) entering into contracts, including contracts for services authorized by section 3109 of title 5, United States Code, without regard to any other provision of law regarding public contracts; .... http://www.nytimes.com/2008/09/21/business/21draftcnd.html?_r=1&ref=business&oref=slogin
ABS, ABX at bottom; extraordinary value seen-JPMorgan JPMorgan Securities said on Friday the actions taken by the U.S. government aimed at stemming systemic risk have created a bottom in prices for cash and derivative segments of the asset-backed securities market. "The actions taken this week and those that are forthcoming make it extremely likely that we have seen the bottom in ABS, ABX and non-agency MBS prices," said Chris Flanagan, analyst at JPMorgan Securities. "Even after Friday morning's sharp rally, we still see extraordinary value and move to overweight," the analyst said in a report. Treasury Secretary Henry Paulson on Friday called for the U.S. government to spend hundreds of billions of dollars to take so-called toxic mortgage assets off the books of financial firms to restore financial stability. http://www.reuters.com/article/rbssFinancialServicesAndRealEstateNews/idUSN1942623620080919