WASHINGTON — House and Senate negotiators worked out a tentative deal with the White House late Saturday on a $700 billion plan to rescue the teetering financial sector from the worst financial crisis since the Great Depression, with an eye toward a House vote Monday and Senate action to follow. A bipartisan coalition including House Speaker Nancy Pelosi, D-Calif., Senate Majority Leader Harry Reid, D-Nev., Treasury Secretary Henry Paulson and House Republican Whip Ray Blunt, R-Mo, announced the agreement after midnight in the Capitol, capping a marathon negotiating session that began in early afternoon. The lawmakers, eager to get a deal in place before financial markets open Monday, emphasized that their agreement still had to be translated into legislative language and presented to lawmakers for sign off. Staff was told to work through the night to finish the necessary paperwork. The plan would allow the Treasury Department to buy troubled mortgage-backed securities and other loans held by financial institutions. The government could later resell the assets, presumably after they'd recovered much of their value. The proposal is designed to restore market confidence, set a floor under asset prices and allow bank capital and credit to flow again, unlocking critical gears of lending for the economy.
The compromise plan will keep the basic Treasury Department framework. But the Bush administration would get only the first $350 billion of the money up front, and the rest would be contingent on congressional action. The deal would include limits on compensation to executives whose firms benefit from government assistance, which Sen. Kent Conrad, D-N.D., said was one of the thorniest issues lawmakers and the administration faced during their hours-long negotiating session. Conrad said lawmakers wanted to prevent golden parachutes — big bonsues to executives of the type who crash their company, then sail off into the sunset. The legislation would place "reasonable" limits on severance packages for executives of companies that benefit from the rescue plan. It would affect fired executives of financial firms, and executives of firms that go bankrupt.
The House braced for a difficult vote set for Monday on a $700 billion rescue of the financial industry after a weekend of tense negotiations produced a plan that Congressional leaders portrayed as greatly strengthened by new taxpayer safeguards. The 110-page bill, intended to ease a growing credit crisis, came after a frenzied week of political twists and turns that culminated in an agreement between the Bush administration and Congress early Sunday morning. The measure still faced stiff resistance from Republican and Democratic lawmakers who portrayed it as a rush to economic judgment and an undeserved aid package for high-flying financiers who chased big profits through reckless investments.
GM, Ford and Chrysler are seeking up to $50 billion in low-interest government-backed loans, double the $25 billion approved last year as part of an energy bill. The
- JJ Commentary: This so-called “bailout” is like putting a band aid on Hoover Dam. The underlying problem of too much debt (a function of greed) remains – and is even exacerbated by the bailout.