Lawmakers Agree on Outline of Bailout

[kpete]

Source: New York Times

September 26, 2008
Lawmakers Agree on Outline of Bailout
By DAVID M. HERSZENHORN

WASHINGTON — House and Senate negotiators from both parties said Thursday that they had reached general agreement to move forward with the Bush administration’s proposed $700 billion rescue effort of the nation’s financial system.

Emerging from a nearly three-hour meeting in the Capitol, Republicans and Democrats said they would continue working through the day to complete the legislative language and would begin final negotiations with the Treasury.

It was unclear if a final draft would be ready by 3:55 p.m. when Congressional leaders are scheduled to meet at the White House with President Bush and the two presidential candidates, Senator John McCain, Republican of Arizona, and Senator Barack Obama, Democrat of Illinois.

But lawmakers in both parties said that few substantive differences and no major obstacles remained. They said the bill would authorize the full $700 billion requested by President Bush, but that Congress was intent on disbursing the money in installments.








Read more: http://www.nytimes.com/2008/09/26/business/26bush.html?_r=2&hp=&oref=slogin&pagewanted=print&oref=slogin

---

Agreement in Principle On Wall Street Bailout
By Big Tent Democrat, Section Legislation
Posted on Thu Sep 25, 2008 at 02:22:57 PM EST

NYTimes:

House and Senate negotiators from both parties said Thursday that they had reached general agreement to move forward with the Bush administration’s proposed $700 billion rescue effort of the nation’s financial system.

One plan under consideration would release $250 billion immediately, with another $100 billion available at the discretion of the president. . . . They also said that there would be limits on pay packages for executives whose firms seek assistance from the government and a mechanism for the government to be given an equity stake in some firms so that taxpayers have a chance to profit if the companies prosper in the months and years ahead.

“We are giving the secretary authority that he will need in order to act and the funding that he will need,” Mr. Dodd said after the meeting, referring to the Treasury secretary, Henry M. Paulson Jr. “We also have dealt, I think effectively, with the issue of effective oversight, with homeownership preservation as well as with executive compensation.”

(Emphasis supplied.) If Dodd is right, the Democratic Congress has done its job.

http://www.talkleft.com/story/2008/9/25/152257/588

[Tandalayo_Scheisskopf]

1. If Dodd is right...

The Dems have also kicked The Little Dictator and his henchman, Heinrich Paulson, right in the goolies. A parting gift.

[Hugin]

2. I'd like a look at this masterpiece.

I'm an adult and could probably discern for myself using my critical thinking skills if it's a good deal or not.

I also notice they failed to mention it was a 'closed door' meeting. Very much like the Abu Ghraib discussions.

[bemildred]

3. What's the hurry?

Would not a sober and thoughtful analysis based of open books and patient analysis be more comforting to the markets than this sort of panic driven and shallow forced march to a "solution" that will not work?

[superconnected]

4. DEMS BIGGEST CAVE IN, well are there any questions who the dems are working for now?

It's not us.

Get pukelosi out of office now.

[leftofcool]

5. I have been saying that since about a month after she took the helm

[mzmolly]

6. "If Dodd is right, the Democratic Congress has done its job."

Let's hope the public understands the 'nuance' of it all. Will people think we saved the economy or bailed out Wall Street?

[Indenturedebtor]

7. MSNBC update with more specifics below:

http://www.msnbc.msn.com/id/26888415/

Bailout deal nears, but will it work?
Plan to shore up the financial system comes with risks, uncertainties

/SNIP/

What’s in the plan? How is it supposed to work?
The core of the plan is the funding of what amounts to a $700 billion, government-run hedge fund that will buy up bad mortgage-backed debts from banks and other financial institutions, allowing them to raise cash and get money moving through the system again.

/SNIP/

The Treasury will likely manage the overall buying and selling of bad debts. It already handles multibillion-dollar auctions of Treasury debt. Treasury Secretary Hank Paulson said private Wall Street firms might be hired to handle the some of the analysis of which debt to buy. Chairman Rep. Barney Frank, chairman of the House Financial Services Committee, has suggested that the New York Federal Reserve — which also buys and sells billions in debt securities every day — might be tapped to manage the fund’s operations.

/SNIP/

How much is this going to cost me?
No one knows. The plan is for the government to hold on to these mortgage-back securities until the economy and housing market improve, and then sell them — possibly for a profit. Banks that sell their bad debts into this plan may also have to give stock to the Treasury. As the crisis subsides, and banks get back on their feet, that stock could also be a winning investment for the government. But if the housing market keeps falling and mortgage defaults keep rising, the government may wind up on the losing side of the trade. The latest housing data, released Thursday, shows home prices fell much further than expected in August. Until the housing market stabilizes, and home prices stop falling, buying mortgage-backed securities is a risky bet.

/SNIP/

What about the homeowners stuck with these bad mortgages: Are they getting help too? Or is this just a bailout for Wall Street?
This was one of the biggest objections to the Treasury’s original proposal; Paulson told Congress that once the government buys up mortgage-backed paper, it may be easier to work out better loan terms with homeowners at risk of default. That's a big maybe.

--------------------------------------------------------------------------------------------------------------------------------

Wow so this "Bipartisan Deal" went off just like all the others: Dems cave to the Administration. Way to go guys! No more blank checks huh?

They even go on to say that no clear agreement has been made on how to cap CEO pay to avoid the defered golden parachute structure that is commonly how these pigs are fed.

But hey at least they pretended to have spines at first? That's almost like vaseline eh?

[PSPS]

9. "until the economy and housing market improve"

How much is this going to cost me?
No one knows. The plan is for the government to hold on to these mortgage-back securities until the economy and housing market improve, and then sell them — possibly for a profit.

The housing market isn't going to "improve" the way they are implying here. Prices are still way over-inflated and that's why property isn't selling.

Why should the taxpayer take on a mortgage on a bungalow that, because of an easy-to-get fraudulent "stated income" liar's loan, is priced at $600/square-foot? This will just prop up the unaffordable housing bubble a few months longer, after which it will collapse anyway. Unless they do away with the qualification process like they did before (no income documents, fraudulent appraisals, etc.,) nobody can qualify for a mortgage at such ridiculous prices.

In other words, the "possibly for a profit" should say "never for a profit." This is a giveaway plain and simple.

[Indenturedebtor]

10. True that. And until we address the fundamentals of wages, etc

Our economy will be unstable and on the brink.

[Sam Ervin jret]

8. What about court oversight? With this bunch of criminals that is a deal breaker.

I am against anything we can't take to a court when we are dealing with people who have a history of criminal activity.

It's bad enough we have to deal with them at all as they politicize the justice department but to deny access to the courts altogether is unacceptable in the extreme when dealing with this cabal.

[On the Road]

11. The Fact That Paulsen Agreed So Quickly ot the Conditions

tells me that he is serious about the problem and feels it is urgent.