I've been a founder at three VC funded computer companies, and when I look at the deals these bankers are getting from the Treasury, I just have to laugh.

No Silicon Valley VC would give you one million dollars, much less billions of dollars, on the terms that the bankers are getting from the the US Treasury.  It looks like Secretary Paulson is abusing our trust to help his old investment banker friends.

A typical VC deal requires revealing all debts or potential debts to the funders.  The funders get voting share and board seats, for their investment, and the board carefully monitors executive salaries and other major expenses.  The shares issued are *not* non-dilutive, nor non-voting, and usually have additional protections over existing common shares.

If the VCs are recapitalizing a company, the existing shareholders are given relatively little protection, typically keeping 0-10% of their initial share of the company; key employees are given new options, if necessary, to retain them.

This same approach should be taken with these banks.   Before a dime is invested, the Treasury should receive full disclosure of the liabilities on the bank's books, including the details of complex derivative contracts and SIVs, to see if the bank can even be saved.  New funding should then depend on getting bonuses and other badly chosen expenses under control, but if enough individuals refuse to renegotiate their bonuses, Treasury should simply refuse to invest -- the banks assets will no doubt be less expensive to obtain from a bankruptcy court.

Any Treasury funding should come along with *voting and highly dilutive* shares, as well as board seats.  The newly recapitalized banks may have to write down the value of some structured assets, or sell them for nearly nothing to the Treasury, but at least they'll be able to lend again, and once the Treasury has certified that the bank no longer holds toxic derivatives, the banks will be able to go to the capital markets again.  New regulations on both bank size, and  acceptable investment classes should be put in place, to avoid a repeat of this mess.  

Finally, the bank shares owned by the Treasury can be sold on the open market and the government can get out of the banking business again.  Because the Treasury department will be able to certify that the bank is now free of toxic derivatives, the banks' shares will value again, 

As an investor, I would never take my money and invest it in a fund that wouldn't tell me what companies it holds, or even what *criteria* it follows in selecting companies to invest in.  I'd never invest in a fund that wouldn't tell me if the companies it buys are "penny stocks" or F500  companies.

Why would I, then, as a tax payer, give $700 billion to the Treasury to invest in random financial companies, without any guidance as to why they're being purchased, or whether they're even solvent?

And that's Dodd's plan!  Paulson's was just to give the money away without getting any equity in return!

These people make me sick.

One thing that I don't see described in Paulson's proposal, or even Dodd's far better plan, is any mention of how to choose the specific companies or other entities that should be bailed out.

I'd feel pretty unhappy if the Treasury was bailing out random investor groups that happened to lose money on what amounts to a bet -- I've lost money on stock picks and don't expect to go to the Treasury to get my money back.

When you start looking at companies providing real benefits to the economy, it gets harder to decide who to bail out.  If, for example, Citibank and Mellon are both in trouble, and one requires three times as big a bail out to stay solvent, the Treasury might choose to bail out only the one requiring the smaller bail out.  And if there are already "enough" surviving commercial banks, you might choose to let them both fold, or merge together.

I'm not sure how you make these calls, but I think that at the very least, they have to be done openly, with a clear rationale provided by the Treasury as to which companies' securities will be purchased, and why.  And if a bank or other financial institution wants to sell its bad securities to the Treasury, it should have to disclose all of the details of its financial state to the Treasury and the public, so the Treasury can tell whether it is a good investment or not, and citizens can tell whether a consistent investment policy is being followed.  Government investments of this magnitude are rife with opportunities for corruption and self-dealing, and it would be foolish to allow these choices to be made in the dark.

In other words, in the very hard area of choosing which companies to bail out, transparency is key. The bail out law should require the Treasury to provide both periodic declarations to Congress and the public of its  high level goals, such as keeping at least 5 large commercial banks operating, along with the accounting details of the investments made to achieve those goals.

And if these requirements scare off some of the less desperate companies from coming to the Tresasury at all, so much the better.

Treasury Secretary Paulson's bailout plan doesn't pass the sniff test in so many ways, it is hard for me to understand what he and Bernanke are trying to pull off.

The plan as described so far provides no criteria for selecting which companies are important enough to the economy to get bailed out; it makes no attempt to get anything back from the bailed out companies, such as a big equity stake, nor does it try to guarantee that the top execs own't walk off with the infused money as "salary" over the next few years; it provides no process to value the purchased assets fairly; it provides no process for vetting the bailed out companies to see if they will be solvent even after the toxic securities are sold; the plan provides no accountability to the courts or Congress, and accepts no guidance from them; it provides for no new regulatory structures to prevent a repeat of this situation; and it provides no estimates of how big the total bill will be once the remaining ARMs reset over the next few years.

Here are some common sense points that Congress should require in any bailout, assuming one turns out to really be necessary:

1) The plan should specify the type of securities Treasury will buy. Some securities are CDOs (bundles of mortgages), while others are very high stakes bets, basically highly leveraged investment vehicles that may be valueless at today's housing prices.  There are also credit default swaps -- essentially insurance policies against default, on these types of securities.  It sounds like Paulson wants the authority to buy *anything* that can be even peripherally connected to mortgages, even though some of these must be impossible to value with any precision.

2) Know who you'll bailout and *why*, and be prepared to explain it. It may be cheaper by far to fund a few new, regulated commercial banks (without an investment bank side), and let the current owners of the bad securities sink or swim on their own.  I certainly don't believe that every holder of junk s securities needs to be bailed out for the sake of the economy.

After all, the holders include pension funds, hedge funds, universities, investment banks, commercial banks, private investment funds.  Some of these play an important role in the economy, and others don't, and I see no reason to bail out hedge funds, for example, that made some very bad bets.  Paulson's plan is completely mum on this matter.

The smaller the number of companies that get bailed out, the better.  I still haven’t heard a convincing argument that any bailout is truly necessary.

3) Open the books!  If the American people are going to bail out *any* entities, the books of that company should be open, including the details of all of their off-book investment vehicles, so the government can see whether the company can even be saved.  I think of buying these securities the way I'd think of making an investment, and you just don't invest this type of money in a company in the absence of detailed financial disclosures.  And to repeat, this information
needs to be public, to keep the Treasury honest; if an entity doesn't want to submit that information, no one's forcing them to take the bailout.

4) If we bailout a company, we should get a significant equity interest in the company.  This guards against moral hazard, and helps reimburse the American tax payer for any risks they end up taking.  And the company should be required to limit executive compensation for a significant period, to avoid the top executives from simply taking the tax payer investment as salary.

5) We should realize that there are still piles of mortgages with ballooning interest rates that haven't reset yet, so this problem may get a lot bigger before it gets better.  We should insist on a getting an idea of how much the bailout will really cost before we start down this road -- it may turn out to be unaffordable in any case.

6) The current proposal provides no discussion whatsoever of what regulations should be put in place to prevent a repeat of this problem when the next bubble gets inflated.  The current plan provides no discussion or framework for a discussion of this topic.  It would be insane to take the bad debt off of the books of some of these investment banks, and free them to go and look for new risky investments to make with US tax payer money.

Most of all, we should not be rushed into structuring a bailout before we have a better idea of what the end goal is.  The more the Bush administration demands instant action, the more suspicious we should be that the Treasury department is trying to pull a fast one.

Senator Obama has a number of issues he should be hammering on to highlight how extreme McCain, Palin and indeed the entire Republican party have become.  Here are the themes of some ads I'd run, if I were sitting on Obama's war chest:

1 -- Palin, and today's Republican party extremists, wants to make it illegal for your daughter to even get the morning after pill, even when raped. Is this "small government," or is this the government legislating one person's extreme religious views for everyone?

2 -- McCain, and today's Republican extremists, wants to bankrupt social security by diverting the money budgeted for social security benefits into privatized accounts, leaving people who've paid social security taxes for decades with nothing for retirement.

3 -- McCain and today's extremist Republican party want to destroy the one part of today's health insurance system that actually works -- group health insurance, by increasing taxes on companies that provide health insurance to their workers.  Individual health insurance is an oxymoron -- real insurance means spreading risk among a large pool of people, not making people pay their own medical bills.  McCain just doesn't understand the fundamentals of insurance, and can't be trusted to design a new insurance system.

4 -- Governor Palin can't seem to remember the truth -- she first said that no one in her administration had anything to do with "troopergate," and then had to announce that her chief of staff intervened. As apparently did her husband as well. She continues to claim that she refused money for the bridge to nowhere, even though she first lobbied for it, then accepted the money and spent that money on other projects only when the bridge itself got too bad a public reputation.  She claims to be a reformer in favor of small government, but she really stands for taxing everyone to give money to a few.

John McCain has chosen a candidate with significantly more conservative views than his own.  I don't think he should get a free pass on this, but should have to answer whether her views match his own.  Specifically, someone should ask McCain:

Your running mate believes that abortion should be illegal, even in the case of rape, incest or to save the life of the mother.  Do your views on this matter match your running mate's, or were you just pandering to religious fundamentalists by choosing Palin?

Your running mate also believes in that creationist teachings should be taught in public schools.  Do you agree?

It appears that, foolishly, the Israelis are destroying as much of Lebanon as they can. Their own politicians say that one goal is to punish the Lebanese people for allowing Hizbollah into the government.

I call that immoral. And strategically, it is stupid. Israel benefits if there is a stable Lebanon with a solid middle-class that partly makes its income from trading with Israel. *In the long term*, it is those types of business and financial links that will bring Israel and its neighbors together, not peace treaties, which are only a prerequisite for true peace. And with respect to Lebanon, Israel has just moved out the date for a true peace by a generation.

There are *always* going to be extremists out to destroy Israel. And, for that matter, the United States. Their existence does *not* give the Israelis, or us, carte blanche to destroy everything and everyone under the sun.

Strategically, we need to bring the middle east together economically. Israel's biggest mistake has been to ignore economic links with its neighbors, which might actually lead to the general population of an Arab nation having positive thoughts towards the Israelis.

Strategically, our biggest mistake in the middle east has been to concentrate on military solutions, when the true problems in most Arab nations is that they are kleptocracies whose economies produce nothing useful to the outside world except oil. We should never have attacked Iraq: by doing so, we destroyed the large Baath component of their middle class, and set Iraq's entry into the modern world *back* by decades. And furthermore, having attacked Iraq, we should never have concentrated on privatizing their wealth, which does nothing to create an Iraqi middle class; we should have doled out Iraqi oil revenue *bottom up*, giving control of each village's share of the money to locally elected groups, who could eventually have enough credibility to elect a national government. But that would have taken time, and Cheney wanted privatize Iraqi oil *fast*, before the French, Russians, and others, figured a way to get in on the bidding again. So, greed and shortsightedness led to fatal tactical mistakes in Iraq, as well.

Al Qaeda showed that they understood the importance of international trade, at least symbolically, when they attacked the World Trade Centers. Perhaps some day our own leaders will recognize that our economic power is the true source of influence on the world, as well. Until that day, far off with our current leaders, be prepared to watch further losses by the West.

Tom's column today ends with:

I repeat: I don’t know if Syria can be brought around, and we certainly can’t do it at Lebanon’s expense. But you have to try, with real sticks and real carrots. Syria is not going to calm things in Lebanon, or Iraq, just so the Bush team can then focus on regime change in Damascus. As one diplomat here put it to me, “Turkeys don’t vote for Thanksgiving.”

An important point: by threatening regime change in Damascus and Teheran, while at the same time launching a full-scale occupation of Iraq, which can't succeed without at least benign neglect from Syria and Iran, we've gotten ourselves in way over our heads. And now the Israelis have started a war that will require them to occupy much of Lebanon, as well. It is inconceivable that Israel would have launched this attack without checking with Bush beforehand. But do these clowns understand that Syria and Iran may lend significant assistance to Hezbollah, and could even send their own troops into Lebanon?

How Bush and Cheney rushed to war to secure a sweetheart oil deal

The war in Iraq has been been beset by dozens of significant errors,

which most observers have pegged to some combination of hubris,

arrogance and stupidity. Yet there is a lot of evidence, mostly

circumstantial, that most of these "errors" were strategically

important, not to winning the war in Iraq, but to ensuring that the

Bush administration had a free hand in rewriting the rules for sharing

Iraq's oil revenue.

Ironically, securing sweetheart contracts for American-based oil

companies doesn't secure inexpensive oil for American consumers;

Americans end up paying the market price for oil no matter who

produces it. It simply provides increased profits for the oil

companies themselves, as will become clear below.

What errors am I talking about here? The decision to invade without

giving the UN arms inspectors more time to validate that Iraq had no

WMDs; pushing Ahmed Chalabi first as the head of the new Iraqi

government, and later, when we learned he had no popular support,

getting him the position as Iraq's oil minister; invading without

significant allied support and with too few troops; and refusing

assistance with the occupation from other nations in late 2003.

To understand our goals in the Middle East, you first have to

understand a little about how oil revenues are typically divided up.

Because oil in the Middle East is relatively inexpensive to extract,

as compared with off-shore drilling for example, the oil companies'

expertise in extracting oil from difficult locations has been

difficult to translate into significant equity oil holdings in that

area.

Most Middle Eastern countries, including all of Iraq's neighbors with

oil - Saudi Arabia, Iran and Kuwait, prohibit any foreign ownership or

equity interest in their oil reserves, either by law or in their

constitutions. Iraq's oil industry was also effectively nationalized

prior to the US invasion; oil production had been completely owned by

the Iraqi government since 1972, and since 1961 all but 0.5% of the

oil had been been owned and controlled by the Iraqi government.

Nearly all work done by foreign oil companies in the Middle East is

done essentially via cost-plus contracts, not by giving the companies

a fixed share of the extracted oil. It's a nice business, but its not

a *great* business.

Thus, the most important feature that oil companies would like to get

in their oil contracts is the right to sell some percentage of the oil

located in the fields at which they are producting oil. This would

enable them to "book" this fraction of the reserves, essentially

including them as assets, and thus boosting their stock price. They

would, of course, like to lock these terms in for as long as possible,

as insurance against changing popular opinion about the deals'

structure. These agreements are typically called Production Sharing

Agreements (PSAs). Of course, in the Middle East, much to the

frustration of large western oil companies, virtually no oil was

subject to such equity sharing PSAs.

In Iraq, however, by June of 2005, that was set to change. The Iraqi

oil ministry had drafted a new law concerning petroleum exploration,

to be proposed to the government elected in Decemeber of 2005 (which

at the time of this writing has not been formed). According to Global

Policy Forum, the draft states that while oil fields currently in

production should be developed by the Iraqi National Oil Company,

newly discovered fields should be developed by private corporations

under new production sharing agreements. Note that Iraq has about 80

known fields, of which only 17 are currently producing oil. These 17

fields represent about 1/3rd of the known oil reserves in Iraq,

leaving about 2/3rds of the oil to be subject to PSAs. And if more

oil is discovered, as is very likely, since Iraqi oil exploration has

been crippled over the past two decades by the Iraq/Iran war, the 1991

Gulf war and the current occupation, the fraction of Iraqi oil subject

to PSAs will increase further. This draft law was produced by the

Iraqi oil ministry under Ahmed Chalabi, the DoD's original choice to

lead the new Iraqi government, and the head of Iraq's interim

government's oil ministry.

Which oil companies were likely to obtain these new concessions? Back

in 1997, Iraq's government signed agreements with Russia's LUKoil,

France's Total, and China's national oil company, for exploration and

production of its oil fields, assuming the embargo would eventually be

lifted. It looked like American and British oil companies would be

locked out of the Iraqi oil fields for years, perhaps even decades.

As far back as March of 2001, Cheney's Energy Task Force was reviewing

the contracts Iraq's government had signed, or was in the process of

negotiating, with special concentration on foreign (to the US) suitors

( see the 'foreign suitors for Iraqi oil' links in this

link). At the time, it looked like American oil companies were

locked out of doing business in Iraq.

However, conveniently, the 2003 invasion has changed all that: In

December 2003, the Paul Wolfowitz at the DoD issued a directive

barring companies from France, Germany, and Russia from bidding on

prime contracts in Iraq (Even Fox covered it ), so, for now, oil companies from these countries are

locked out of competing for Iraqi oil development contracts. And even

before the invasion, in Fall of 2002, Ahmed Chalabi, now head of

Iraq's oil ministry, said "American companies will have a big shot at

Iraqi oil" (Washington

Post ). It looks like Chalabi promised sweetheart oil

deals for American oil companies in return for an invasion installing

him in a position of power.

The amount of money at stake here, under equity sharing PSAs, is by

any standards, enormous. Iraq's known reserves are about 115 billion

barrels, and at $60/barrel, that comes out to about 6.9 *trillion*

dollars. And Iraqi oil is some of the cheapest in the world to

extract, with extraction costs under $1 per barrel. So, were the new

Iraqi government the pawn the DoD expected, American oil companies

would have been looking at potential riches beyond any other

opportunities available in the world.

Things didn't go as planned, of course. As Naomi Klein explains in a

her wonderful article, 'Baghdad Year Zero' in Harper's Magazine ( Harper's ), the

original intention was for Bremer's CPA to privatize Iraq's oil

wealth. But by November of 2003, oil company lawyers had pointed out

that under the Geneva convention of 1949, any contracts signed by a

military occupation government might be invalidated by a later,

legitimate government. By the end of 2003, most companies were

waiting for a duly elected Iraqi government to take power before

proceeding with any forms privatization.

So, with this history as a prism, a lot of puzzling events in the war

become a lot clearer. In late 2002, American oil companies were

locked out of doing any business with Iraq, and other companies,

especially Russia, China and France, were poised to start work in Iraq

as soon as the embargo ended. Since weapons inspectors were roaming

freely throughout Iraq, it was quitely likely just a matter of months

before the world recognized that there were no Iraqi weapons of mass

destruction, and that Iraq was no longer a military threat of any form

to its neighbors. At that point, pressure for lifting the embargo

would have risen. If the Bush and Cheney were really determined to

lock out those foreign suitors, they had to act fast, and they had to

act without the assistance of France, Germany, Russia or China, who

might otherwise insist on participating in Iraq's rebuilding. This, I

suspect, is the real reason we rushed to war in early 2003 - it was

the only chance for American oil companies to get nearly exclusive

access to trillions of dollars of oil.

This history also helps explain why, in December 2003, at a time when

more allies would have helped gain international legitimacy for the

new Iraqi government, and at a time when the reconstruction was first

showing signs of trouble, we *turned down* offers of assistance from

Europeans, and actually banned them from working in Iraq. Even before

the war, we seemed to do everything we could to avoid unity with the

Western Europeans (remember Rumsfeld's Jan 2003 dismissal of French

and German concerns over the war as coming from "Old Europe"). Again,

the more the invasion was a purely American adventure, the easier it

would be to control the post-war Iraqi government, and its oil

ministry.

It also explains why Cheney is so determined to keep the contents of

his Energy Policy Task Force secret: it may well have discussed how to

divide Iraq's oil wealth, way back in March, 2001.

In short, there is a vast amount of circumstantial evidence that the

Bush administration was looking for any excuse to invade Iraq in order

to help their political base literally break into the Iraqi oil

business. This plan required attacking Iraq before Iraq's true

military weakness became public knowledge, and it required America to

fight with the fewest number of allies possible, to minimize

the chance of post-war competition between oil companies for Iraqi oil

development.

The results, of course, have been horrible. Upwards of 30,000 Iraqi

civilians, and thousands of American soldiers who believed they were

defending our nation, have died in a military operation apparently

primarily designed to enrich a few oil companies. The unity of the

Western alliance has been shattered, and the United States has lost

the credibility to lead the world in the battle against Al Qaeda and

other fundamentalist groups, or in helping direct a united plan to

limit nuclear proliferation. We can only count the minutes until

America hopefully comes to its senses.

References and further reading:

Here are some links to articles I found particularly interesting. The

Global Policy Forum site in particular has a large number of very

readable papers describing details about the oil industry.

Global Policy Forum: Crude Designs

GPF 2002 paper on pre-war Iraqi oil partnerships

GPF: History of oil companies in Iraq

Harper's Baghdad Year Zero article

Washington Post Chalabi quotes

Cheney's Energy Task Force Iraq Oil Maps

The most annoying thing about the Democratic leadership today is their
abosolute incoherence on the war on terror.  The Republican position
on the war is simple to state: "We're going to invade countries in the
Middle East and occupy them until the people form democracies, and
elect pro-American, and perhaps pro-Israeli, governments."  Yes, it's
stupid, failing miserably, and plays to all of America's weaknesses,
but it *is* clear.  The Democratic position seems to be to denounce
the current plan, while not changing it (Kerry), or adding even more
troops that we don't even have (Clinton and Lieberman).  I'm simply
not a good enough writer to express my contempt for the foolishness
and intellectual laziness of these leaders.  Representative Murtha's
is the only sanely reasoned position, although it speaks only to the
events today in Iraq.

To do better, let's look back a bit, to right after 9/11, when two
things were very clear.

First, it is clear that while a nuclear attack on the west is suicidal
for a sovereign nation, the post-war nuclear non-proliferation
mechanisms don't work against terrorists.  Our first priority should
have been, and should still be, to ensure that all fissionible nuclear
materials in the world are secured by multinational observers backed
by a NATO-like force.  Countries unwilling to allow permanent
monitoring and accounting of any materials that can be used to build a
nuclear weapon would be subject to military action.  That's the
tactical issue, and it is an important one.

Second, there's a big problem, especially in the Arab world, but in
some other countries as well, with a non-existent middle class, for it
is the prsence of a large middle class in an export-based economy, not
"democracy," that really makes a genuinely peaceful neighbor.
Democracy usually follows, but sometimes only after a generation of
growing middle class power; look at South Korea, for example.  The
Republican's assumption that imposing a democratic government on a
country with no middle class to support a pluralistic society was
stupid from the get-go.  It was obvious that a demcratic election in
Iraq would lead to a fundamentalist government taking power: the
majority of Iraqis are poor Shiites without any skills valued by an
export oriented economy.  With oil revenues the only source of
economic power in Iraq, elections literally follow a "winner take all"
model.

Our foreign policy then, should play to our strengths.  That means
encouraging the growth of export-based economies, and economic
engagement with the countries we wish to affect.  For over four
decades, we've technically opposed Fidel Castro's rule in Cuba, while
our embargo effectively prevents the formation of any other source of
economic power in that country.  What could be stupider?  But
encouraging the growth of middle classes throughout the world is a
long term strategy, not a short term fix.

Of course, what we actually did, instead of leading a true
international coalition to control WMDs and the raw materials that can
be used to build them, was instead to invade and occupy Iraq.  That
was has been a disaster: at present, the elected government run by
Shiite Iranian-allied thugs whose associated militias have been
terrorizing whatever middle class existed in Iraq.  Its violent
opposition comes from Sunnis who want us out of the country, and a
smaller group of Al Qaeda members who want to take over Iraq
themselves (but have no hope of doing so).  Unfortunately, the Sunnis
and Shiites there will keep killing each other until *they* decide to
stop.  All our troops are doing now is providing backing for some of
the worst elements in Iraqi society, the true Islamic fundamentalists
of the Badr brigade and SCIRI, to rule over the entire country.  It is
time for us to recognize that we have failed in Iraq, and leave.  The
Sunnis and Shiites will eventually negotiate an end to the violence,
in order to share in Iraq's oil wealth.  After that, they will crush
the local Al Qaeda elements, since they are loathed by both the Sunnis
and the Shiites, and are tolerated in the Sunni areas only because, to
date, we're the common enemy of both the Sunnis and Al Qaeda.
Eventually Iraq will hopefully recover from this disaster, but
realistically, there is little we can do to bring that date closer.

I would sorely love to hear some Democrats on the national stage
acknowledge the basic realities above.  Instead, I just hear
platitudes about staying the course.

Most discussion of the NSA wiretap program misses the key point.  Of course it is reasonable for wiretaps and other surveillance mechanisms to be applied in order to locate terrorists in the United States.  They key issue is whether the laws controlling those wiretaps, and the Constitution's protections against arbitrary search and seizures, can be violated in doing so.

President Bush has stated that his powers to ignore the FISA statute comes from his Article II powers as commander in chief of the armed forces in wartime.  But that is simply untenable: the "war" he's talking about, the war on terror, will never end, since there will always be terrorists somewhere who wish us ill.  If their presence is all that's required for the President to assume dictatorial powers, then this nation is no longer a republic.

Unfortunately, that's the position President Bush has taken: that as long as the war on terror exists, no law bounds his options.  If the President refuses to submit to the rule of law, he should be impeached, or Congress should just go home.

1. 100% coverage.  All legal residents of the United States should be covered by the plan.
2. The plan should be funded by general federal revenues.  If you fund it from employee contributions from their salaries, you preserve the destructive effects on employment that health insurance has today.
3. 100% portability between jobs, that is, no connection with your employer.

1) It is *not* a trust agreement, nor does factcheck.com have the title correct.  It is titled "Gift Administration Agreement," not "Gift Trust Agreement" and does not create a trust (a separate legal entity) to oversee the stock options.  Instead, it is an agreement granting power of attorney to someone (whose identity we don't know) to exercise and sell the options for the benefit of the specified charities.  There is no requirement that the stock be sold by any specific date.

2) While it says in section 8(e) that it is irrevocable, section 8(c) goes out of its way to state that the agreement creates no legal rights for any of the charities.  And section 7(b) provides a mechanism for the agreement to terminate without having completely donated all of the stock (the agent needs only to be in breach of the agreement, which could easily be arranged).  Section 7(a) might also provide a way out, if the agent resigns, and no new agreement is signed.

3) I see nothing in that document that indicates that this wouldn't create a huge tax deduction for the Cheneys.