The financial world was fixated on Capitol Hill
as Congress battled over the Bush administration's request for a $700
billion bailout of the banking industry. In the midst of this
late-September drama, the Treasury Department issued a five-sentence notice that attracted almost no public attention.
WASHINGTON - If you're a financial institution, it has become a little easier to borrow money. But for most of the rest of us, it's tougher than ever.
It was the freeze-up of the wholesale lending markets used by banks to fund day-to-day operations that caused the financial system to break down in September. That crisis has eased significantly, thanks to government intervention to guarantee loans and prop up financial institutions.
To understand the meaning of the U.S. election results, it is worth looking back to the moment when everything changed for the Obama campaign. It was, without question, the moment when the economic crisis hit Wall Street.
Up to that point, things weren't looking all that good for Barack Obama. The Democratic National Convention barely delivered a bump, while the appointment of Sarah Palin seemed to have shifted the momentum decisively over to John McCain.
The air crackles with anticipation. Fingers are crossed. It gets hard to breathe. Hope, for so long locked in a closet, begins pounding on the door.
A number of financial experts now fear that the federal government's $143 billion attempt to rescue troubled insurance giant American International Group may not work, and some argue that company shareholders and taxpayers would have been better served by a bankruptcy filing.
The Treasury Department leapt to keep AIG from going bankrupt on Sept. 16, and in the past seven weeks, AIG has drawn down $90 billion in federal bailout loans. But some key AIG players argue that bankruptcy would have offered more structure and greater protections during a time of intense market volatility.
What a difference an emergency makes. Scare people enough and $700 billion can materialize almost overnight. The White House can repudiate its core economic philosophy--government should leave markets alone--within hours. Congress, where spending bills sometimes wait years to reach the floor, can pass one of the costliest laws in its history within days. Even the endlessly fickle media can provide 24/7 news coverage, making the emergency the topic on everyone's mind.
In the final days of the election, many Republicans seem to have given up the fight for power. But that doesn't mean they are relaxing. If you want to see real Republican elbow grease, check out the energy going into chucking great chunks of the $700 billion bailout out the door. At a recent Senate Banking Committee hearing, Republican Senator Bob Corker was fixated on this task, and with a clear deadline in mind: inauguration.
WASHINGTON - After a bruising battle to get it through a doubting Congress, the Bush administration's $700 billion Wall Street rescue plan to purchase distressed mortgages and other bad assets has morphed into something else entirely.
WASHINGTON - The prospect of taxpayer money lining the
wallets of executives at banks being bailed out by the government
prompted congressional leaders and New York's top law enforcement
official on Wednesday to demand answers from the banks themselves and
the Treasury Department.
The officials' requests reflect growing concern among some lawmakers
about the rapidly evolving shape of the Bush administration's
$700-billion bank bailout program.
