FACTBOX-Details of U.S. House bill to close TARP loopholes

Jan 9 (Reuters) - A senior House Democrat released on Friday
the outline of his planned legislation to increase transparency
and close loopholes in the Treasury Department's $700 billion
Troubled Asset Relief Program (TARP).

Rep. Barney Frank, chairman of the House Financial Services
Committee, said his bill included the following provisions and
that he hoped to have a floor vote on it next week:

BANKS

* Allow smaller U.S. banks to participate in TARP on the same
terms as big banks that have already received billions of dollars
in federal money.

* Require quarterly disclosures by banks that receive TARP
money about how they used the money and whether they increased
lending.

* Require banks and their primary federal regulator to agree
on how TARP funds are to be used and set benchmarks for the
institution to meet in expanding the availability of credit to the
U.S. economy.

* Require examinations by a bank's primary federal regulator
to review use of TARP money and executive compensation.

* Prohibit the acquisition of a "healthy" institution by a
bank receiving TARP funds. A bank must show that an intended
acquisition could have been accomplished without funds provided
under TARP.

EXECUTIVE COMPENSATION

* Prohibits incentives that encourage "excessive" risks by
companies.

* Allows the claw-back of executive pay received that was
based on inaccurate information.

* Bans all golden parachute payments for the duration of the
U.S. government's investment in the company.

* Applies the same executive pay limits included in the
Detroit automakers' bailout bill to any new recipient of TARP
funds. These include a ban on bonuses or incentives for 25
highest-paid employees and ban on private airplanes or leases.

* Makes executive compensation restrictions retroactive for
all existing recipients of TARP money.

OVERSIGHT

* Allows Treasury Department to have an observer attend board
meetings of companies that receive federal money.

* Expands the Financial Stability Oversight Board to include
the chairman of the Federal Deposit Insurance Corp and two other
members to be appointed by the president and subject to Senate
confirmation. The board will have the authority to overturn
decisions of the Treasury Secretary by a two-thirds vote.

* Requires Treasury Department to obtain warrants in a
recipient company equal to no less than 15 percent of any
financing provided.

FORECLOSURE RELIEF

* Conditions the use of the final $350 billion funding for
TARP on the program's use of at least $50 billion for foreclosure
mitigation.

* Requires Treasury Secretary to develop foreclosure relief
plan by March 15, begin committing TARP funds by April 1.

* Limits foreclosure relief to owner-occupied residences.

* Requires Treasury Department to use "some combination" of
these alternatives: A guarantee program for qualifying loan
modifications; covering fees or buying mortgages to bring costs of
Hope for Homeowner loans down; paying down second lien mortgages
that prevent a loan modification; payments to loan services linked
to loan modifications; the purchase of whole loans for the purpose
of modifying or refinancing the loans and allowing them to be
delegated to the FDIC.

* Provides legal safe harbor from liability to loan servicers
for modifying home loans.

* Requires Congressional Oversight Panel to report to
lawmakers by July 1 on foreclosure relief measures taken and how
successful they have been.

AUTO INDUSTRY

* Clarifies Treasury Department's authorization to help
Chrysler LLC [CBS.UL], General Motors GM.N and Ford Motor (F.N: Quote, Profile, Research)
under TARP program and includes House auto bill provisions such as
long-term restructuring requirements.

* Clarifies Treasury Department's authority to provide support
to financing arms of automakers to ensure they can offer needed
credit, including through dealer and other financing of consumer
and business auto and other vehicle loans and dealer floor loans.

CONSUMER LOANS, COMMERCIAL REAL ESTATE, MUNIS

* Clarifies Treasury Department's authority to support
availability of consumer loans such as student loans, and auto and
other vehicle loans. Such support may include the purchase of
asset-backed securities, directly or through the Fed.

* Clarifies Treasury Department's authority to support
commercial real estate loans and mortgage-backed securities.

* Clarifies Treasury Department's authority to support issuers
of municipal securities for new issuance or remarketing of
existing auction rate securities.

HOPE FOR HOMEOWNERS PROGRAM

* Eliminates 3 percent upfront premium.

* Reduces 1.5 percent annual premium to a range between 0.55
percent and 0.75 percent, based on risk-based pricing.

* Raises maximum loan to value from 90 percent to 93 percent
for borrowers above a 31 percent mortgage debt to income ratio or
above a 43 percent ratio.

* Eliminates government profit sharing of appreciation over
market value of home at time of refinancing.

* Allows payments to loan servicers participating in
successful refinancings.

HOME BUYER STIMULUS

* Requires Treasury Department to develop a program outside
TARP to stimulate demand for home purchases.

* Program must ensure availability of "reduced rate loans"
through financial institutions that act as either originators or
as portfolio lenders and to be offered in connection with the Hope
for Homeowner refinancing program.