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lawmakers reduced the initial cost by half to $350 billion, with the remainder to be authorized later, and they added provisions creating an oversight structure and help to homeowners facing foreclosure.
The compromise also includes a proposal by House Republicans, whose objections scuttled an earlier agreement in principle, that provides for government insurance for mortgage- backed securities. The plan also imposes limits on the compensation of executives at participating companies.
``It will be the first time in American history that there will be legislative restrictions on CEO compensation,'' said House Financial Services Chairman Barney Frank, Democrat of Massachusetts.
Lawmakers want to announce a firm agreement before Asian financial markets open late today, Senate Majority Leader Harry Reid said. The deadline reflects concern that markets will be further rocked by lack of an agreement after the Standard & Poor's 500 index recorded its largest weekly drop since May.
Treasury Secretary Paulson last night said the proposed deal ``will work and be effective.'' More work needs to be done, ``but I think we're there,'' he said.
Paulson and Federal Reserve Chairman Ben S. Bernanke proposed the plan after the collapse and bankruptcy of Lehman Brothers Holding Inc. and the Federal Reserve's takeover of American International Group Inc. earlier this month. They said it was needed to revive lending and restore the flow of credit to the U.S. economy.
Faber Says U.S. $700 Billion Rescue Plan Isn't Enough (Update3)
Sept. 25 (Bloomberg) -- The U.S. government's $700 billion bank rescue plan ... Poor's 500 Index will rally to as high as 1,350 points following the approval of the bailout plan because ...
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... Goldman Sachs Group Inc. is an endorsement of the Treasury's $700 billion bank rescue plan. ... compared with six in the prior 12 months, when his largest deal was $350 ...
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Washington Times - 350 militants to join Palestinian forces
JERUSALEM -- About 350 Palestinian gunmen, wanted by Israel as terrorists, are ... Do you support the government's $700 billion bank rescue plan? Yes; No; Undecided; Other
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Paulson's $700 Billion Bank Rescue Seeks `Absolute Control' for ... Post Biggest Two-Day Rally Since 1987 on Bank Rescue Plan ... DAX 30: 6,248.00: 350.00: 5.93: CAC 40: 4,323.50: 353.00: 8.89
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Washington Times - Cyclone kills more than 350 in Burma
A powerful cyclone killed more than 350 people, destroyed thousands of homes ... Do you support the government's $700 billion bank rescue plan? Yes; No; Undecided; Other
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Bank-Rescue Compromise Plan Is Under Review by U.S. Lawmakers
Bank-Rescue Compromise Plan Is Under Review by U.S. Lawmakers By Alison Vekshin and Laura Litvan ... During weeklong negotiations, lawmakers reduced the initial cost by half to $350 billion, with the remainder to be ...
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NewsDateTime: 51 minutes ago
House, Senate leaders cite progress in reaching agreement on financial ...
... Bush expressed confidence that lawmakers soon would approve a rescue plan. He acknowledged that many Americans are frustrated and angry that up to $700 billion in ... For example, after the first $350 billion is made available, Congress could try to ...
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NewsDateTime: 19 hours ago
Lawmakers Renew Talks on Rescue Plan Amid Signals of Compromise
... lawmakers today are set to resume participation in talks on a $700 billion rescue plan ... Another $350 billion could be spent to buy troubled assets unless Congress ... McCain, Obama Urge Lawmakers to Support $700 Billion Bank-Rescue Program
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Stocks waver while awaiting news of bailout
NEW YORK - Financial markets remained tense Friday after efforts to approve a $700 billion federal banking bailout ran into ... said at the White House lawmakers can express doubts but ultimately should “rise to the occasion” and approve a plan to ...
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TREASURIES-Higher in Europe on bailout plan doubts
... as doubts grew over a speedy passage of the U.S. government's $700 billion bank bailout plan ... S. government borrowing rates, fluctuated in a range of around 350 to 400 ... numbers the previous session reinforced the view that even a massive bank rescue ...
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The details of the bailout deal
From Office of Speaker Nancy Pelosi -- Sept. 28, 2008
IMPROVING THE FINANCIAL RESCUE LEGISLATION
Significant bipartisan work has built consensus around dramatic improvements to the original Bush-Paulson plan to stabilize American financial markets -- including cutting in half the Administration's initial request for $700 billion and requiring Congressional review for any future commitment of taxpayers' funds. If the government loses money, the financial industry will pay back the taxpayers.
3 Phases of a Financial Rescue with Strong Taxpayer Protections
# Reinvest in the troubled financial markets … to stabilize our economy and insulate Main Street from Wall Street
# Reimburse the taxpayer … through ownership of shares and appreciation in the value of purchased assets
# Reform business-as-usual on Wall Street … strong Congressional oversight and no golden parachutes
CRITICAL IMPROVEMENTS TO THE RESCUE PLAN
Democrats have insisted from day one on substantial changes to make the Bush-Paulson plan acceptable -- protecting American taxpayers and Main Street -- and these elements will be included in the legislation
Protection for taxpayers, ensuring THEY share IN ANY profits
# Cuts the payment of $700 billion in half and conditions future payments on Congressional review
# Gives taxpayers an ownership stake and profit-making opportunities with participating companies
# Puts taxpayers first in line to recover assets if participating company fails
# Guarantees taxpayers are repaid in full -- if other protections have not actually produced a profit
# Allows the government to purchase troubled assets from pension plans, local governments, and small banks that serve low- and middle-income families
Limits on excessive compensation for CEOs and executives
New restrictions on CEO and executive compensation for participating companies:
# No multi-million dollar golden parachutes
# Limits CEO compensation that encourages unnecessary risk-taking
# Recovers bonuses paid based on promised gains that later turn out to be false or inaccurate
Strong independent oversight and transparency
Four separate independent oversight entities or processes to protect the taxpayer
# A strong oversight board appointed by bipartisan leaders of Congress
# A GAO presence at Treasury to oversee the program and conduct audits to ensure strong internal controls, and to prevent waste, fraud, and abuse
# An independent Inspector General to monitor the Treasury Secretary's decisions
Transparency -- requiring posting of transactions online -- to help jumpstart private sector demand
# Meaningful judicial review of the Treasury Secretary's actions
Help to prevent home foreclosures crippling the American economy
# The government can use its power as the owner of mortgages and mortgage backed securities to facilitate loan modifications (such as, reduced principal or interest rate, lengthened time to pay back the mortgage) to help reduce the 2 million projected foreclosures in the next year
# Extends provision (passed earlier in this Congress) to stop tax liability on mortgage foreclosures
# Helps save small businesses that need credit by aiding small community banks hurt by the mortgage crisis—allowing these banks to deduct losses from investments in Fannie Mae and Freddie Mac stocks
The administration had initially requested virtually unfettered authority to operate the bailout program. But as they moved toward clinching a deal, both sides appeared to have given up a number of contentious proposals, including a change in the bankruptcy laws sought by some Democrats to give judges the authority to modify the terms of first mortgages.
Congressional leaders and Treasury Secretary Henry M. Paulson Jr. emerged from behind closed doors to announce the tentative agreement at 12:30 a.m. Sunday, after two days of marathon meetings.
“We have made great progress toward a deal, which will work and be effective in the marketplace,” Mr. Paulson said at a news conference in Statuary Hall in the Capitol.
In the final hours of negotiations, Democratic lawmakers, including Representative Rahm Emanuel of Illinois and Senator Kent Conrad of North Dakota, carried pages of the bill by hand, back and forth, from Speaker Nancy Pelosi’s office, where the Democrats were encamped, to Mr. Paulson and other Republicans in the offices of Representative John A. Boehner of Ohio, the House minority leader.
At the same time, a series of phone calls was taking place, including conversations between Ms. Pelosi and President Bush; between Mr. Paulson and the two presidential candidates, Senator John McCain and Senator Barack Obama; and between the candidates and top lawmakers.
“All of this was done in a way to insulate Main Street and everyday Americans from the crisis on Wall Street,” Ms. Pelosi said at the news conference. “We have to commit it to paper so we can formally agree, but I want to congratulate all of the negotiators for the great work they have done.”
In a statement, Tony Fratto, the deputy White House press secretary, said: “We’re pleased with the progress tonight and appreciate the bipartisan effort to stabilize our financial markets and protect our economy.”
A senior administration official who participated in the talks said the deal was effectively done. “I know of no unresolved open issues for principals,” the official said.
In announcing a tentative agreement, lawmakers and the administration achieved their goal of sending a reassuring message ahead of Monday’s opening of the Asian financial markets.
Lawmakers, especially in the House, are also eager to adjourn and return home for the fall campaign season.
Mr. Obama and Mr. McCain both expressed support for the rescue package early on Sunday, while adding that it was hardly a moment for taxpayers to cheer.
“This is something that all of us will swallow hard and go forward with,” Mr. McCain said in an interview on ABC’s “This Week.” “The option of doing nothing is simply not an option.”
Mr. Obama, in a statement, said: “When taxpayers are asked to take such an extraordinary step because of the irresponsibility of a relative few, it is not a cause for celebration. But this step is necessary.”
The backing of the presidential candidates will be crucial to Congressional leaders seeking to generate votes for the bailout plan among lawmakers, especially those up for re-election in November. The general public has bristled at the notion of risking $700 billion in taxpayer funds to address mistakes on Wall Street, and many constituents have urged their elected officials to vote against the plan.
Among the last sticking points was an unexpected and bitter fight over how to pay for any losses that taxpayers may experience after distressed debt has been purchased and resold.
Democrats had pushed for a fee on securities transactions, essentially a tax on financial firms, saying it was fitting that they contribute to the cost.
In the end, lawmakers and the administration opted to leave the decision to the next president, who must present a proposal to Congress to pay for any losses.
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