They have a deal. But what deal?

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It will be very interesting to see the actual legislative language of this bailout agreement that negotiators from Congress and the Treasury Department announced that they reached early this morning. Because from what they’ve said so far I still can’t tell if Congress won or Treasury did.

What Treasury initially asked for was $700 billion, with no strings attached, with which it planned to go buy lots of troubled debt securities, mortgage-backed and otherwise.

People in Congress made lots of noise about the need for close oversight of the program, and I don’t think that was ever a real sticking point for Treasury. But Congressional Democrats (and some Republicans) also insisted, inspired in at least some small part by a wave of counterproposals coming out of the economics community, on getting an equity stake in the companies that sold securities to Treasury.

If that equity stake is mandatory or near-mandatory, this could end up working out to be a recapitalization–at least a partial one–of the banking industry. Treasury would pay well over current fire-sale prices for the securities, thus helping troubled banks out of their balance-sheet problems, and taxpayers would get an ownership stake in return. This is an approach that has had some success in the past, most notably in Sweden in the early 1990s.

If taking the equity stake is completely at Treasury’s discretion, then who knows how it’s going to work.

Right now all we’ve heard is that the equity stake is part of the plan, but that it’s probably not going to be applied in every last case. Until we know more about that, it’s awfully hard to say what this bailout agreement amounts to.

Update: TIME’s Massimo Calabresi thinks Paulson pretty much got what he wanted.

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