The Democrats, who control both the House and Senate, questioned whether there were sufficient protections for taxpayers and homeowners, but they acknowledged the need to act quickly. Some Democrats said they might use the opportunity to add some limits on what corporate executives are paid and look for ways to reduce home foreclosures.
Some details of the plan:
- Raises the public debt limit to $11.3 trillion.
- Earlier this year, Congress voted to increase the debt limit to $10.6 trillion as part of omnibus housing legislation that included broader federal authority over Fannie Mae and Freddie Mac. Fannie and Fannie have since fallen under government control. See The Rise and Fall of Fannie Mae and Freddie Mac
- The proposal would give the US Treasury secretary Paulson significant leeway in buying, selling and holding residential or commercial mortgages, as well as "any securities, obligations or other instruments that are based on or related to such mortgages."
- Total purchases can not exceed $700 billion outstanding at any one time.
- Treasury could hire asset managers to handle the debt purchases, which could include residential or commercial mortgages and related instruments that were originated or issued on or before Sept. 17, 2008.
- Hedge Funds would not be eligible under the plan to offload troubled assets.
House Speaker Nancy Pelosi (D., Calif.) said, "We will strengthen the proposal by ensuring that the government is accountable to the taxpayers in any future actions under this broad grant of authority, implementing strong oversight mechanisms, and establishing fast-track authority for the Congress to act on responsible regulatory reform."
Senate Majority Leader Harry Reid (D., Nev.) was more critical saying, "while the Bush proposal raises some serious issues, we need to resolve them quickly."
Financial Services Chairman Barney Frank (D., Mass.) would like to see limits put on executive compensation.
The Republicans praised the plan and called for swift action to enact the required legislation.
Treasury secretary Hank Paulson said "I am convinced that this bold approach will cost American families far less than the alternative -- a continuing series of financial-institution failures and frozen credit markets unable to fund economic expansion."
The stock markets liked the news and rallied Thursday and Friday, but they remain in bear market territory. See Market Update for September 21, 2008
I was a buyer Wednesday, Thursday and Friday. To learn what I bought for my newsletter explore portfolio, subscribe now!
Click chart courtesy of stockcharts.com for full size imageSenate Majority Leader Harry Reid (D., Nev.) was more critical saying, "while the Bush proposal raises some serious issues, we need to resolve them quickly."
Financial Services Chairman Barney Frank (D., Mass.) would like to see limits put on executive compensation.
The Republicans praised the plan and called for swift action to enact the required legislation.
Treasury secretary Hank Paulson said "I am convinced that this bold approach will cost American families far less than the alternative -- a continuing series of financial-institution failures and frozen credit markets unable to fund economic expansion."
The stock markets liked the news and rallied Thursday and Friday, but they remain in bear market territory. See Market Update for September 21, 2008
I was a buyer Wednesday, Thursday and Friday. To learn what I bought for my newsletter explore portfolio, subscribe now!
More:
- US Congress examines $700 bln market bailout plan
Forbes - The Bush administration Saturday sent Congress a $700 billion plan to purchase bad mortgage debt. - Treasury Seeks Authority to Buy $700 Billion Assets
(Bloomberg) -- The Bush administration asked Congress for unchecked power to buy $700 billion in bad mortgage investments from US financial companies in ... - But Struggle Looms Over Details:
Wall Street Journal - USA: The two mortgage firms have since fallen under government control. Democrats will work with the Bush administration on enacting legislation swiftly - $700B rescue plan may not save some troubled banks
The Associated Press: While the reverse auctions could help banks set a clearing price for mortgage-related assets, Reinhart said, that "price doesn't mean that every financial
So, these guys get it wrong for YEARS and now they want us to rush through a fix which gives them absolute power and no accountability. Not on MY tax payer watch!
ReplyDeleteWSJ: * SEPTEMBER 25, 2008
ReplyDeleteBailout Pact Gains Momentum Amid Push for Tough Controls
WASHINGTON -- A dramatic flurry of activity late Wednesday, including a prime-time address by President George W. Bush, appeared to galvanize efforts to finalize the administration's $700 billion financial-markets bailout, despite continuing tensions and an occasionally heated debate on Capitol Hill.
Democratic leaders hope to nail down details of the measure early Thursday, ahead of an extraordinary summit meeting in the afternoon at the White House, which will bring together Republican and Democratic presidential nominees, along with Mr. Bush and top leaders from Congress.