PDF of the Federal Bailout Proposal is downloadable here
WASHINGTON — President George W. Bush welcomed the economic rescue plan agreed to Sunday evening by congressional leaders as “a very good bill.”
The agreement authorizes Treasury Secretary Henry M. Paulson, Jr. “to establish a troubled asset relief program, or ‘‘TARP,’’ to purchase, and to make and fund commitments to purchase, troubled assets from any financial institution, on such terms and conditions as are determined by the secretary,” the agreement says in part.
A statement from the White House said Bush is confident Congress “will do what is best for our economy” by approving the measure promptly.
CNN.com reported that the $700 billion would be disbursed in stages, with $250 billion made available immediately for the Treasury’s use.
The New York Times reported that “the bill includes pay limits for some executives whose firms seek help, aides said. And it requires the government to use its new role as owner of distressed mortgage-backed securities to make more aggressive efforts to prevent home foreclosures.”
MSNBC.com reported that “the rescue plan casts Washington’s long shadow over Wall Street with the federal government taking over huge amounts of devalued assets from beleaguered financial firms in exchange for more oversight.”
Rep. Barney Frank, D-Mass., said the bill calls for any shortfall from the government’s later sale of the securities it buys to be made up by the financial companies that are bailed out. That provision kicks in after five years. New Hampshire Sen. Judd Gregg and House Speaker Nancy Pelosi announced a tentative deal shortly after midnight. The measure has to go to a vote of both houses now.
The House plans a vote on the rescue bill Monday. The Senate is expected to follow later this week. The rescue is the largest government intervention in financial markets since the Great Depression. It would let the government take over huge amounts of devalued assets from beleaguered financial companies in hopes of unlocking frozen credit.”No longer will the U.S. taxpayer bail out Wall Street, and that’s the message,” Pelosi said late Sunday. “It’s not about a bailout of Wall Street … it’s for the people saving for the education of their children, so small businesses can get credit.”On Sunday afternoon, Gregg’s Web site posted a statement: “I want to thank both sides of the aisle and both sides of the Capitol for the tremendously hard work they’ve put in. And I especially want to thank, and express my appreciation to, Secretary Paulson.
“What we have here is dramatic progress towards accomplishing something that is critical to the American people. We can’t underestimate the threat we face relative to the fiscal melt down and the impact it will have on Main Street. This is about people’s jobs, it’s about people’s savings, it’s about people’s ability to participate in commerce, to send their kids to school, and to be able to borrow money to run their small businesses. So action is critical, we have to take it promptly, and the Congress is responding. We are on track to doing something that will be very substantive and appropriate to address this issue.”
Senate Majority Leader Harry Reid, D-Nev., said hearings will be set this fall to look into what precipitated the banking crisis. Reid said quick action was necessary to prevent paralysis of the country’s economy.”Every American has an interest in fixing this crisis,” Reid said. “Even now it’s difficult for people to get a car loan. Even now it’s difficult … to get a student loan. The market is frozen for houses in many neighborhoods in our country. We’ve got to change this and that’s what this legislation is all about.”
Experts: No Quick Fix For Economy
If history is any indication, the $700 billion bailout plan isn’t going to relieve the economy from more anguish — at least right away. Experts said it usually takes years to recover from a financial crisis severe enough for politicians to ride to the rescue with truckloads of taxpayer money.
The economy slipped into an eight-month recession in July 1990 following the government’s August 1989 bailout of the savings-and-loan industry. Housing prices that had just begun to erode continued to fall for another three years. The current crisis could lead to longer unemployment lines, as companies suffer through declining sales and limited access to credit and even more bank failures as cash-strapped borrowers don’t repay loans.
The deputy dean of Yale Law School said in a best case scenario, the U.S. economy will bounce back within two years.
McCain, Obama React
Sen. John McCain said he hopes to be able to support the newly negotiated deal to bail out the financial industry, adding he wants to see the details first. Interviewed Sunday by ABC’s “This Week,” McCain said, “This is something that all of us will swallow hard and go forward with.” McCain also said he probably would have voted for legislation to keep the government running even though it contains thousands of the type of pork barrel projects he strongly opposes. McCain said he intends to return to full-time campaigning on Monday, after spending parts of several days in Washington because of negotiations on the bailout.
Meanwhile, Sen. Barack Obama said he is inclined to support the proposed bailout being negotiated by lawmakers. Obama said a tentative agreement reached early Sunday includes several principles he proposed, including increased oversight, relief for homeowners facing foreclosure and limits on executive compensation for chief executives of firms that receive government help.
Obama said he is unhappy about the agreement, but that it is necessary. Obama said he is inclined to support the bailout plan because he believes Main Street is now at stake. Obama spoke in an interview on CBS’ “Face the Nation.”
original posting: KCRA, Sacramento
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