Senate to Consider Financial Bill Tonight, DeFazio Proposes Alternative

It is likely that the U.S. Senate will take up a version of a financial bailout bill this evening. Sens. Obama, McCain and Biden are expected to attend.

Rep. Peter DeFazio (D-Oregon) has also proposed an alternative to the earlier House bill, which he called the "No BAILOUT" Act (Bringing Accounting, Increased Liquidity, Oversight and Upholding Taxpayer Security). The measure includes five key points.

1) The bill would require the SEC to suspend the application of fair value accounting standards to financial institutions without regard to conditions of the market.

2) Naked short selling would be prohibited by SEC rule.

3) The short sale "tick test" would be re-instituted.

4) The bill would require FDIC to implement a "net worth certificate program." The FDIC would determine banks with short-term capital needs and the ability to financially recover in the foreseeable future. For those entities that qualify, the FDIC would purchase net worth certificates in these institutions. In exchange, these institutions would issue promissory notes to repay the FDIC, counting the amount “borrowed” as capital on their balance sheets and

5) Increasing the FDIC insurance limit from $100,000 to $250,000.

Both presidential candidates have also called for this change in FDIC insurance.