Calculated Risk: Draft: Emergency Economic Stabilization Act of 2008
Here are some parts on pricing mechanism:
(d) PROGRAM GUIDELINES.â€”Before the earlier of the end of the 2-business-day period beginning on the date of the first purchase of troubled assets pursuant to the authority under this section or the end of the 45-day period beginning on the date of enactment of this Act, the Secretary shall publish program guidelines, including the following:
(1) Mechanisms for purchasing troubled assets.
(2) Methods for pricing and valuing troubled assets.
(3) Procedures for selecting asset managers.
(4) Criteria for identifying troubled assets for purchase.
So it’s all up to the Secretary to establish the rules. Same with Warrants – it’s up to the Secretary to negotiate.
Treasury Secretary Hank Paulson is of course the Ken Lay of Goldman-Sachs — the CEO who bailed out shortly before the whole thing imploded. Hank was closer to our President than Kenny Boy, however, so while Enron went bankrupt, Goldman-Sachs was bailed out in the nick of time and now we’re going to trust one of the men who built this mess to solve it.