Republican Shelby ConcernedBy Reuters - | Posted 2008-09-22 Print
It was the latest step in fast-moving negotiations between Congress and the Bush administration over a massive program designed to address the worst U.S. financial crisis since the Great Depression.
A key Senate Republican has significant reservations about the plan, said his spokesman on Monday.
Alabama Sen. Richard Shelby, top Republican on the banking committee, remains unconvinced that Treasury's proposal strikes a balance between the interests of the taxpayer and the economy, said spokesman Jonathan Graffeo.
Shelby is concerned that the plan "would reward Wall Street while doing nothing for homeowners or for local financial institutions ... He will continue to work with Chairman Dodd to see whether there is a way forward," Graffeo said.
Under the Senate Democrats' proposal, Treasury could not buy, or commit to buy, any troubled assets unless it gets "contingent shares" in the asset-selling institution "equal in value to the purchase price of the assets to be purchased."
The contingent shares could be shares in the financial institution, its parent or holding company, or a related institution, according to the draft language.
If shares in the asset-selling company were not publicly traded, Treasury could take senior debt instead of shares.
If Treasury later disposed of the troubled assets and got less money for them than it paid initially, the contingent shares would help cover the loss, the language said.
The Democrats' proposal calls for the entity that manages the troubled assets bought under the plan to work to prevent foreclosures and protect homeownership through loan modifications and use of related federal programs.
(Additional reporting by Jeremy Pelofsky; Editing by Tim Dobbyn)
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