Draft of Democratic Bill Includes Provision to Acquire Shares from Firms

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A draft of the U.S. Democratic proposals for legislation to bail out the financial system includes provisions for the government to acquire shares of financial firms seeking aid, and aims to limit the Treasury's authority to purchase illiquid assets, the Wall Street Journal reported on Monday.

"Sen. Dodd's plan would not allow the Treasury Department to purchase any assets 'unless the Secretary receives contingent shares in the financial institution from which such assets are to be purchased equal in value to the purchase price of the assets to be purchased,'" said the WSJ.

In a second bill, the Democrats call for limits on CEO compensation on firms seeking aid from the government program.

The Journal also said the Democratic bill calls for the creation of an oversight body comprised of SEC, Fed and FDIC officials, who would monitor the bailout program.

Earlier on Monday, U.S. President George W. Bush warned the Congress not to use the bailout legislation to tack on unrelated provisions.

By Erik Kevin Franco and edited by Sarah Sussman
©CEP News Ltd. 2008