Archive for Thursday, September 25, 2008

Congress reports agreement on $700 billion bailout

September 25, 2008


— Warned that time was running short to bolster the distressed economy, congressional Republicans and Democrats reported agreement in principle Thursday on a $700 billion bailout of the financial industry, and said they would present it to the Bush administration in hopes of a vote within days.

Emerging from a two-hour negotiating session, Sen. Chris Dodd, D-Conn., said, "We are very confident that we can act expeditiously."

"I now expect that we will indeed have a plan that can pass the House, pass the Senate (and) be signed by the president," said Sen. Bob Bennett, R-Utah.

The bipartisan consensus on the general direction of the legislation was reported just hours before President Bush was to host presidential contenders Barack Obama and John McCain and congressional leaders at the White House for discussions on how to clear obstacles to the unpopular rescue plan.

Key lawmakers said at midday that few difficulties actually remained.

"There really isn't much of a deadlock to break," said Rep. Barney Frank, D-Mass, chairman of the House Financial Services Committee.

Bush told the nation in a televised address Wednesday night that passage of the package his administration has proposed is urgently needed to calm the markets and restore confidence in the reeling financial system. His top spokeswoman, Dana Perino, had told reporters earlier Thursday that "significant progress" was being made.

Financial markets were mixed in early trading; the Dow Jones industrial average rose more than 200 points on optimism about the deal but a credit market squeeze remained as doubts about the proposed plan's effectiveness drove demand for short-term, safe-haven assets.

House Speaker Nancy Pelosi, D-Calif., said Bush's agreement with Democrats on limiting pay for executives of bailed out financial institutions and giving taxpayers an equity stake in the companies cleared a significant hurdle.

The core of the plan envisions the government buying up sour assets of shaky financial firms in a bid to keep them from going under and to stave off a potentially severe recession.

Even as political figures haggled over the shape and price of the bailout, new economic indicators showed that orders for big-ticket manufactured goods plunged in August by the largest amount in seven months and that new applications for unemployment benefits were at their highest level in seven years.

And new home sales tumbled in August to the slowest pace in 17 years, while the average sales price fell by the largest amount on record. It served to further dramatize the problem that Washington is trying to solve.

Bush acknowledged Wednesday night that the bailout would be a "tough vote" for lawmakers. But he said failing to approve it would risk dire consequences for the economy and most Americans.

"Without immediate action by Congress, America could slip into a financial panic, and a distressing scenario would unfold," Bush said as he worked to resurrect the unpopular bailout package. "Our entire economy is in danger."

Bush's warning came soon after he invited Obama and McCain, one of whom will inherit the economic mess in four months, as well as key congressional leaders to a White House meeting Thursday to work on a compromise.

With the administration's original proposal considered dead in Congress, House leaders said they were making progress toward revised legislation that could be approved.

Paulson and Federal Reserve Chairman Ben Bernanke have been crisscrossing Capitol Hill in recent days, shuttling between public hearings on the proposal and private meetings with lawmakers, to sell the proposal.

Obama and McCain are calling for a bipartisan effort to deal with the crisis, little more than five weeks before national elections in which the economy has emerged as the dominant theme.

"The plan that has been submitted to Congress by the Bush administration is flawed, but the effort to protect the American economy must not fail," they said in a joint statement Wednesday night. "This is a time to rise above politics for the good of the country. We cannot risk an economic catastrophe."

Presidential politics intruded, nonetheless, when McCain said earlier Wednesday he intended to return to Washington and was asking Obama to agree to delay their first debate, scheduled for Friday, to deal with the meltdown.

Obama said the debate should go ahead.

Lawmakers in both parties have objected strenuously to the rescue plan over the past two days, Republicans complaining about federal intervention in private business and Democrats pressing to tack on more conditions and help for beleaguered homeowners.

But many in both parties said they were open to legislation, although on different terms than the White House has proposed.


BigPrune 9 years, 7 months ago

This "fix" is a sham.This issue is all about supply and demand. What needs to happen is they need to change the tax law. If someone could buy a home and depreciate it over 5 years, it would entice people who make say $150,000 a year to purchase another home as an investment since they could depreciate it over 5 years. This would drive home values up because people would be buying homes again. What is happening now is the housing market's bubble has burst and people who had adjustable rate mortgages now own a home that isn't worth as much as it was when they bought it. Now they have to refinance and they can't qualify so the banks foreclose.Whatever this "fix" is, it won't last very long and we will be in this situation again in another couple of years. Let these big Wallstreet firms on the brink go away. Congress caused this mess and most of them were on the payroll of these big Wallstreet firms. The big money makers were democrats. This "fix" is another Great Society fiasco.Change the tax laws and let people who can afford to buy a new home or a second home drive the prices up. This will cure our financial problems. Since the dawn of our nation, real estate has always gone up. It will have ups and downs sure, but why bail these companies out while the real problem is the housing prices which will remain low? This congressional "fix" isn't going to correct the housing price shortfall and we'll see this mess again. Mark my words.

Richard Heckler 9 years, 7 months ago

On Wednesday, George Bush went on TV to sweet-talk Americans into letting him steal $700 billion of our tax dollars - $2,333 for every man, woman, and child - to bail out his greedy rich friends on Wall Street.Today (Thursday) Bush will meet with Democratic and Republican leaders to finalize a deal that gives Bush nearly everything he wants, but nothing America needs: * The people who caused the problem or profited most should pay for it * Re-regulate to prevent this from happening again * Include Main Street in the bailout and invest in a new productive economy Worst of all, it's another massive fraud. Bush lied to our faces when he promised to buy toxic securities "at their current low prices... and we expect that much, if not all, of the tax dollars we invest will be paid back."Bull. This is the same administration that promised the invasion of Iraq would pay for itself through lower oil prices. The cost of that disaster is now $3 trillion and climbing, not to mention millions dead, maimed, or exiled.

janeyb 9 years, 7 months ago

If Sarah Palin had said "FDR was on television in 1929" it would be all over the news. LJW would be running blogs and articles about it. Joe Biden says it and it is kept quiet. Katie Couric critizes Palin, but doesn't mention after her interview with VP Candidate Joe Biden that it is obvious he is brain damaged by two arterial blows in the brain.

dandelion 9 years, 7 months ago

Where is Tommy boy and Kevin? Why aren't they defending their hero, Bush? Keep trying to push these problems back to the pre-Bush, but you're going to have to bend back to far.

woodenfleaeater 9 years, 7 months ago

Now what is McCain going to use? He has to go to Washington to uh...uh....figure out the healthcare issue...yeah....that's it!

sdinges 9 years, 7 months ago

CNN is currently reporting that talks have imploded.

woodenfleaeater 9 years, 7 months ago

If you're going to to play TOB, than I want in on the action...Turtle man, unique in his own way...

feeble 9 years, 7 months ago

McCain ad House GOP just derailed the Paulson plan.WaMu just failed and was seized by the government.The Dow has already lost 138 pts in after hours trading.No connection to see here, move along, move along.

texburgh 9 years, 7 months ago

First it was Hoover; Now it's Bush. First it was Roosevelt; Now let it be Obama.Get back to regulations to protect Americans (yes, sometimes from themselves); Get back to a financial system run on sound economic principles, not greed and avarice.Elect Democrats.

Terry Jacobsen 9 years, 7 months ago

Actually J.P. Morgan just bought up Washington Mutual. Yes the ball is bouncing, but try to keep your eye on it.

LiberalDude 9 years, 7 months ago

McCain is scared. He knows that Obama will make him look foolish in the debate.Ten days ago McCain said, "the fundamentals of our economy are strong". The man is clueless.

ndmoderate 9 years, 7 months ago

I have a feeling that we're all going to get screwed on this deal.

aha 9 years, 7 months ago

I guess McCain has to show up to debate now, huh?

Luxor 9 years, 7 months ago

Make every registered Republican pay a chunk of it. It was their administration that got us into this mess.

daddax98 9 years, 7 months ago

"I bought a house that I could afford and I pay my bills on time. Now my tax dollars will be used to bail out people who were foolish enough to think they could afford a $300k home on a $60k salary. Shame on the Republicans and Democrats (yes, both parties are guilty) who decided to reward people for being foolish with their money."DittoWhat people don't realize is that this will keep house prices artificially high and when it comes time for me to upgrade my house I will have to pay more while these idiots that bought to much house will profit. My house is almost paid off and this makes me want to refinance, put the cash in a safety deposit box and default so the gubment can bail me out

janeyb 9 years, 7 months ago

Biden thinks FDR was president in 1929 and that FDR appeared on Television! Is he about to blow another cranial artery?

Haiku_Cuckoo 9 years, 7 months ago

I bought a house that I could afford and I pay my bills on time. Now my tax dollars will be used to bail out people who were foolish enough to think they could afford a $300k home on a $60k salary. Shame on the Republicans and Democrats (yes, both parties are guilty) who decided to reward people for being foolish with their money.

dandelion 9 years, 7 months ago

Haiku_Cuckoo (Anonymous) says:I bought a house that I could afford and I pay my bills on time. Now my tax dollars will be used to bail out people who were foolish enough to think they could afford a $300k home on a $60k salary. But you don't mind bailing out companies who over pay their executives, even if the executives do a lousy job?

persevering_gal 9 years, 7 months ago

I agree with ese. It is good to see both the Republicans and the Democrats working together on something for a change.

jumpin_catfish 9 years, 7 months ago

Hey ss18, thanks for answering all the questions and opening our minds to the truth. I mean seriously you have saved me from the error of my ways.

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