WASHINGTON — Congressional leaders and the Bush administration reached a tentative deal early today on a landmark bailout of imperiled financial markets whose collapse could plunge the nation into a deep recession.
House Speaker Nancy Pelosi announced the $700 billion accord just after midnight Saturday but said it still has to be put on paper.
"We've still got more to do to finalize it, but I think we're there," said Treasury Secretary Henry Paulson, who also participated in the negotiations in the Capitol.
"We worked out everything," said Sen. Judd Gregg, R-N.H., the chief Senate Republican in the talks. He said the House should be able to vote on it today, and the Senate could take it up Monday.
The plan calls for the Treasury Department to buy deeply distressed mortgage-backed securities and other bad debts held by banks and other investors. The money should help troubled lenders make new loans and keep credit lines open. The government would later try to sell the discounted loan packages at the best possible price.
At the insistence of House Republicans, some money would be devoted to a program that would encourage holders of distressed mortgage-backed securities to keep them and buy government insurance to cover defaults.
The legislation would place limits on severance packages for executives of companies that benefit from the rescue plan, but details were sketchy. -- San Jose Mercury News
Yes, I imagine the details are very sketchy.
The unbelievable rush to solve this problem this instant is beyond me. I work on a investment bank trading floor. There is definitely a liquidity problem, meaning a lack of cash. That would be because a lot of people have lost a lot of money. I don't want to downplay that, but that problem will be around in 4 weeks, or 5 weeks or longer.
I cannot understand Barney Frank and Nancy Pelosi ramming this thing through this weekend. The big bank that was going to fail Washington Mutual has failed and JPMorgan stepped in literally as the regulators were closing them down. AIG we already know about and are taking care of. In fact, I will bet the AIG is sold back to private investors in a year. It is a very profitable company, this risky dive into credit default swaps was a asinine move that left them exposed for billions, but they are normally very profitable and will recover.
So, I have been asking, and asking what the hell is the rush here? I have no answers. Nobody is giving any.
Despite the changes made during an intense week of negotiations, the heart of the program remains Bush's original idea: To have the government spend billions of dollars to buy mortgage-backed securities whose value has plummeted as hundreds of thousands of Americans have defaulted on their home loans.
"We're very pleased with the progress made tonight," said White House spokesman Tony Fratto.
Yes I would bet you are Tony... I would bet you are.
Everyone who can should contact their congressperson, right now and have them say HELL NO to this deal as it stands. No taxpayer money for CEO's who suck at their jobs. We need to look at provisions for homeowners not wingtip welfare queens.
