By Forbes.com

Congratulations. If you’re an American taxpayer, you’re about to become the owner of a brand-new $700 billion attempted bailout of the U.S. financial system.

After a 263-171 vote by the House of Representatives on Friday, President Bush signed the legislation, aimed at rescuing the freezing credit markets in an effort to shore up the failing economy.

Actually, it’s a bit bigger than $700 billion. The version of the bill that passed Friday contains some expensive add-ons, including a provision that keeps the alternative minimum tax (AMT) from encroaching upon the middle class in 2008, clean-energy tax incentives, disaster relief and the extension of expiring tax cuts for businesses and individuals. It also expands government insurance on bank deposits from $100,000 to $250,000 through 2009.

There are some pretty dubious additions as well.

How does it work?

The bailout plan gives the Treasury extremely broad authority to buy up to $700 billion in troubled assets, like mortgage-backed securities, from companies that are having difficulty selling them. Uncle Sam can also insure these assets instead of buying them.

The idea is to get these securities off companies’ books — or at least give them a government guarantee — so that these businesses can more easily lend and borrow again. Only assets that were originated on or before March 14, 2008, are eligible. The Treasury has through 2009 to use the funds.

Once the bill becomes law, the Treasury will hire a team of consultants and managers to help the government figure out what to buy. This group will also assist the Treasury in determining how to price the assets, which are now tough to value. The most likely scenario is an auction. The Treasury could sell the securities for a profit at a later date.

If there is a net loss, in 2013, the president will have to come up with a report to recoup the shortfall–however, only an act of Congress can put that plan in place.

What about oversight?

The Treasury secretary would periodically submit to Congress a detailed report of the bailout’s progress, including all financial transactions and the “types of parties involved.”

In addition, every quarter, a special inspector general would provide Congress with a report including all purchases made and income received from the bailout.