McClatchy: Bailout would come in stages that Congress could halt

chill_wind

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Sun Sep-28-08 01:23 PM
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McClatchy: Bailout would come in stages that Congress could halt

Edited on Sun Sep-28-08 01:24 PM by chill_wind

Bailout would come in stages that Congress could halt

By Kevin G. Hall | McClatchy Newspapers

WASHINGTON — Congress and the Bush administration reached tentative agreement early Sunday on a sweeping $700 billion rescue plan to take bad assets off the books of banks and other financial firms. The deal is expected to be put on paper in the course of the day and sent to legislators for debate and a vote later in the week.

The two sides were racing a self-imposed deadline to get a deal by 6 p.m. Eastern time before Asian financial markets opened for business. A deal was announced in the wee hours by tired, puffy-eyed lawmakers that had been working almost around the clock to reach accord.

As lawmakers neared the tentative deal, staff members had their phones confiscated to prevent leaks in what had become a heavily politicized negotiation. Lawmakers pledged to post a copy of the deal online later Sunday for an angry American public to take a look at the compromise ahead of a congressional vote.

A tentative deal had been announced last Thursday, only to have House Republicans balk. The new compromise gives Democrats more restrictions on the pay of Wall Street execs and a taxpayer stake if the program actually makes money. Republicans tacked on a parallel insurance plan that can work as an alternative to taxpayer funding and killed provisions that would have let federal judges modify distressed mortgages.
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Specifically, the proposed compromise envisions:

-- $700 billion in a taxpayer rescue of Wall Street, with $250 billion available immediately, another $100 billion upon report to Congress and the final $350 billion available only upon action by Congress.

-- Money will be used to buy mortgage-backed securities and other troubled assets, taking them from investment banks, commercial banks, smaller community banks, pension plans and even local governments.

-- Government can use its power as the owner of the troubled mortgage bonds to facilitate modifications for the mortgages themselves.

-- Bipartisan oversight commission will monitor the program. If after five years there is a net loss to the taxpayers, president will have to submit legislative proposals to recoup funds from beneficiaries.

-- Democrats won new, unspecified restrictions on CEO pay and executive compensations for participating companies.

-- Republicans won language creating a parallel insurance program that companies can choose instead of giving up their bad assets.

-- Creation of warrants, which allows any windfall coming to participating companies to be shared with the government, thus the taxpayers.

-- Actions by Treasury will be posted online in real time.

--Judicial review of Treasury’s actions.

The presidential campaigns welcomed the compromise on the Sunday talk shows and took credit for it – even though Senate staffers say neither candidate was instrumental in getting a deal done.