ARTICLE · 08 OCTOBER 2008

The Evolving “Bailout” Proposal – Emergency Economic Stabilization Act Of 2008

Sutherland Asbill & Brennan LLP

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The Administration, working with U.S. Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke, proposed legislation last week that would provide for the U.S. government’s purchase of $700 billion of illiquid mortgage and other assets currently held on the books of U.S. financial institutions.

United StatesGovernment, Public Sector

James Cain

Daphne Frydman

Previously published on September 29, 2008

The Administration, working with U.S. Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke, proposed legislation¹ last week that would provide for the U.S. government's purchase of $700 billion of illiquid mortgage and other assets currently held on the books of U.S. financial institutions. Following a week of intense negotiations among key Democrats and Republicans on Capitol Hill, negotiators announced this weekend that an agreement had been reached on key provisions of the "Emergency Economic Stabilization Act of 2008." On Sunday, the Senate Banking, Housing, and Urban Affairs Committee released the full text of the proposed bill,² together with an executive summary³ and section-by-section summary⁴. This afternoon, the House has voted down the current proposal by a vote of 228-205. However, given the dramatic adverse effect the negative vote has had on the markets, it can be anticipated that further

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