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TechnoratiUS Congress Debates Massive Wall Street Bailout
WASHINGTON - US lawmakers on Monday debated a 700-billion-dollar bailout plan for struggling Wall Street banks as US President George W. Bush appealed to Congress to quickly approve the deal to free up frozen credit markets.
"I fully understand that this will be a difficult vote," Bush said at the White House before the House of Representatives began debate on the proposal amid stiff opposition from some members of his Republican party.
But he said the rescue package "will help keep the crisis in our financial system from spreading throughout our economy."
The US president spoke after a compromise proposal was hammered out in high-stakes negotiations between rival party leaders in Congress and White House officials over the weekend before global markets reopened on Monday.
The plan would mark the largest government economic intervention since the Great Depression of the 1930s, and is designed to shore up a troubled economy suffering from a burst US housing bubble that has ravaged the global banking system.
The proposal grants the Treasury secretary authority to buy up toxic mortgage-related assets in troubled banks in hopes of easing the flow of credit and reviving the moribund housing market.
As the pivotal debate began in Congress, the shakeup of the US banking sector continued with Citigroup on Monday agreeing to takeover Wachovia Bank. US regulators backed the deal that grants the government a stake in one of the nation's biggest banks.
The takeover came as Wachovia faced a near collapse of its share price and weakening confidence because of its exposure to troubled mortgage assets.
Congressional leaders, mindful of the approaching November 4 general elections, acknowledged the vote could be close while some conservative Republicans and liberal Democrats vowed to oppose the measure.
"We now have a deal that promises to bring near-term stability to our financial turmoil, but at what price?" Republican Congressman Michael Pence, a critic of the bailout, asked in a letter to colleagues.
White House hopefuls Republican John McCain and his Democratic rival Barack Obama have offered cautious backing for the plan, both claiming that demands they had made had been included in the new bill.
Despite the weekend deal, the financial crisis spread anxiety across global markets, prompting nationalizations and rescues of European banks while sending stocks down in Asia and Europe.
Britain had to nationalize Bradford & Bingley bank, governments intervened to prop up Belgian-Dutch group Fortis and other European banks got sucked into the storm.
Federal Reserve chairman Ben Bernanke echoed Bush's appeal, voicing support for the bailout bill.
"This legislation should help to restore the flow of credit to households and businesses that is essential for economic growth and job creation, while at the same time affording strong and necessary protections for taxpayers," he said in a statement.
Democratic leaders portrayed the revised plan, that ran more than 100 pages, as much improved from the three-page version sent days earlier by the White House, saying it included stricter oversight, safeguards for taxpayers and caps on executive pay packages.
"Working in a bipartisan way, we sent a message to Wall Street. The party is over," said House Speaker Nancy Pelosi.
"The era of golden parachutes for high flying Wall Street operators is over. No longer will the US taxpayer bail out the recklessness of Wall Street."
The proposed rescue, posted on financialservices.house.gov and formally titled the Emergency Economic Stabilization Act of 2008, calls for the immediate release of 250 billion dollars to enable the government to buy up troubled assets.
Under the bill, the president is authorized to approve a further 100 billion dollars, but the plan gives Congress a veto power over purchases above that limit and sets a ceiling for all purchases of 700 billion dollars.
The rescue operation will be overseen by a board including the chairman of the Federal Reserve, the Treasury secretary and the chairman of the Securities and Exchange Commission.
The bill prohibits "golden parachutes" for CEOs or other executives who lose or leave their jobs at companies participating in the plan as long as the Treasury holds equity in those firms.
The negotiations were reportedly marked by bitter disagreement over how to pay for possible losses suffered by taxpayers after debt has been bought and sold.
Democratic lawmakers had called for financial firms to help pay for the losses but the draft legislation left the question open for the next US president to tackle.
22 Comments so far
Show AllWhatever happened to the GAAP (Generally Accepted Accounting Practices)? What happened to the auditors who were supposed to check the GAAP? What happened to "due diligence"? Evidentially the Wall Street motto is still "Greed Is Good-Ethics Is Bad." Of course there's the age old plan of deregulating all the service industries so the Wall Street wizards could work their derivative magic upon them, thereby turning stability into instability.
What's the matter with Congress? Well, maybe they were too busy raising money for their next election bout to be bothered doing their jobs.
Corporate America, Wall Street, Congress, all the regulatory agencies. that republican administrations (starting with Ronald Reagan) have castrated over the years, led to this debacle.
I don't want any bill passed that doesn't explain why the banks threw out their standard loan practices, and how this new bill rectifies the problem. Why were the rules of GAAP (generally accepted accounting practices) ignored and forgotten, shredded or whatever they did with them?
Why the auditing firms didn't catch this practice and certified their book as OK?
Why were pension funds buying these derivatives when they weren't supposed to under ERISA regulations? Why didn't the SEC and the IRS and the Dept. of Labor not see that? Didn't they learn anything from the Orange County debacle back in 1994, when they went bankrupt from investments in very risky derivatives that the treasurer admitted he knew nothing about. Congress should read: Big Bets Gone Bad: Derivatives and Bankruptcy in Orange County. The Largest Municipal Failure in U.S. History by by Philippe Jorion
I want to know why no one has come up with the idea of going back and reestablish the Glass-Steagall Act and abolish the Gramm-Leach-Bliley Act along with the Commodity Futures Modernization Act of 2000?
Evidentially we can't rely on the board of directors of corporations to do their jobs. Which is to look out for the best interests of the shareholders. Something has to be done about that. Multi million dollar salaries, stock options up the ying yang and "golden parachutes" that would entice any CEO to "screw the pooch" and get fired.
The major Wall Street ratings firms played a big, and largely overlooked, role in creating the current economic crisis. Ratings companies are supposed accurately and impartially analyze the books of financial institutions. But they failed to do that. Instead these reckless firms signed off on the health of companies like Fannie Mae, Freddie Mac, and Lehman Brothers again and again, much the same way that Enron’s accountants said everything was fine right up to its complete collapse.
I don't want a bill passed until those who looked the other way are not involved in it. Paulson, Bernanke, Greenspan, Gramm etc.
I don't want a bill passed until it can be understood by a twelve year old. How about this for a bill: The Ethical Standards for Corporate America and Wall Street Act?
snydly
THE TOP 1% HAS DECIDED TO SAVE THE TOP 1%.
I CAN'T REMEMBER ANOTHER TIME WHEN THE MSM WAS SO CANTED TOWARD AN ISSUE.
PERHAPS NOT SO SURPRISING---EVERY ONE OF THOSE PUNDITS LOST AT LEAST A MILLION YESTERDAY.
THIS VOTE HAS SHOWN US THAT THE POLITICAL SPECTRUM IS NOT A LINE WITH TWO ENDS, BUT A BROKEN CIRCLE WITH THE ENDS CLOSER TO EACH OTHER THAN TO THE "MIDDLE".
LOOKS LIKE A WINNING COMBO---DENNIS/RALPH/RON TRIUMVIRATE PRESIDENCY.
THE THIRD PARTY IS PURPLE...WITH A HEAVY GREEN TINT!
Here is an idea..give each taxpayer the over $8,000 each that the $700 Billion bailout represents, and let them bail out their own economy.
After all it IS THEIR MONEY, not the politicians nor Wall Streets.
would be a hell of a jump start
"The only means of strengthening one's intellect is to make up one's mind about nothing, to let the mind be a thoroughfare for all thoughts." - John Keats
Here is an idea..give each taxpayer the over $8,000 each that the $700 Billion bailout represents, and let them bail out their own economy.
After all it IS THEIR MONEY, not the politicians nor Wall Streets.
would be a hell of a jump start
"The only means of strengthening one's intellect is to make up one's mind about nothing, to let the mind be a thoroughfare for all thoughts." - John Keats
Here is an idea..give each taxpayer the over $8,000 each that the $700 Billion bailout represents, and let them bail out their own economy.
After all it IS THEIR MONEY, not the politicialn or Wall Streets.
would be a hell of a jump start
"The only means of strengthening one's intellect is to make up one's mind about nothing, to let the mind be a thoroughfare for all thoughts." - John Keats
Fuck’em. Let their golden parachutes burn like roman candles. Let the country go broke… maybe it will put an end to our demokrazy empire building resource grabbing war crimes.
Now that the give-away was defeated, it's time they listen to rational planse like that of Kucinich, Nader and others.
The Kucinich page article denies access - Why why why?
You have done it!
Over 96 Democrats helped create a bi-partisan defeat of the Bush Reid and Pelosi Corporate Welfare Plan.
To put it another way, the Republicans defeated the Pelosi-Reid-Paulson plan.
Dems: 144 Aye ---- 95 No
Repubs: 65 Aye ---- 133 No
http://clerk.house.gov/evs/2008/roll674.xml
House defeats $700B financial markets bailout
And the SUN is still shining brightly!
It did not pass!
Heads up! Signing on to COMMONDREAMS is REALLY S-L-O-W-... Either everyone is reading it and the server is gagging OR somebody has messed up the down load time. all my other sites are fast enough, getting to this one took a half hour to load.....
What is the deal?
It's been like this for several days. I assume it's because the servers can't handle the traffic.
I strongly believe that all interactive sites should have a dedicated "bulletin board" on the front page, if only as a courtesy to alert visitors to transient technical issues or changes. I've suggested it here and elsewhere.
I couldn't count the number of webmasters I've caused to mutter, "Yeah, I got your 'bulletin board' right here!" as they hit the delete key.
Congress is finally giving George Bush enough rope to hang all of us.
Gee, it's as if Congress is collectively deciding to hold its nose and vote for something that's quite dubious at best, on the premise that by golly, afterwards we'll really have to hold their feet to the fire!
Where have I heard THAT before?
Dear Sen. Smith, Sen. Wyden and Rep. Wu,
Like Fannie Mae, Freddie Mac, Bear Stearns, Lehman, AIG, etc. etc, I've made some bad decisions that have cost me money.... one bad marriage, some bad career choices, some investments that went down instead of up.
Unlike the leaders of those businesses, I never got signing bonuses, salaries, stock options, annual bonuses, or golden parachutes in the millions when things went wrong. Life's not fair.
But when you vote to subsidize the screw-ups of the fat cats, do you think you could add another $500,000 for me? I know I made some stupid decisions along the way, but if you bail me out just this once, I promise not to make any more misteaks.
"The era of golden parachutes for high flying Wall Street operators is over. No longer will the US taxpayer bail out the recklessness of Wall Street." - Pelosi
hmm...and this "message" is sent by giving a 700 billion bailout? The photo shot of W flanked by Pelosi and Reid with McCain on one end and Obama on the other was really telling of the City of Lost Children we are...yikes!
What did WaMu's Alan Fishman get for his three weeks of employment? I wonder what the tellers got for the same three weeks work...
It's way past time to REPUDIATE this corporate government AND their debt.
"we sent a message to Wall Street. The party is over," said House Speaker Nancy Pelosi.
Then she said "and the US taxpayers will clean up your party mess while your limos drive you home."
And then she said "Your parties rock. Make sure I get invited to the next one."
I can't believe you people still sit back and do not understand that you have been hoodwinked for the last eight years .... We have been involved in the largest WHITE ELEPHANT sale out of the American people that could ever (never) been accoplished .... fuck-em all