New information coming out of Dodd's office is much more encouraging. His draft of the bailout -- and as chair of the relevant committee, he has authorship over the legislation -- would not allow the Treasury to buy 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." That's still a bit different than buying debt in return for equity, but not all that different. It also has some language on excessive CEO pay, but I'm not quite sure how to parse it. Implementing limitations on CEO pay to be "determined to be appropriate in the public interest in light of the assistance being given to the entity" could be read a lot of ways, and it rather depends on who's implementing the proposal. Presumably an Obama Treasury Department could use it to limit CEO pay, and a McCain Treasury Department could ignore it. Additionally, and this is a big deal, the Dodd plan would institute oversight through "a special inspector general program and a separate emergency oversight board, which would include top officials from the Federal Reserve, Federal Deposit Insurance Corp., and Securities and Exchange Commission." As far as I can tell, there's nothing dealing directly with the foreclosure crisis, though.
