US okays $700b bailout
Washington, Sept. 28: US Congressional leaders and the Bush
administration reached a tentative agreement on early Sunday on what may become
the largest financial bailout in American history, authorising the Treasury to
purchase $700 billion in troubled debt from ailing firms in an extraordinary
intervention to prevent widespread economic collapse.
Officials said that Congressional staff members would work through the
night to finalise the language of the agreement and draft a bill, and that the
bill would be brought to the House floor for a vote on Monday. 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.
In some cases, the government would receive an equity stake in companies
that seek aid, allowing taxpayers to profit should the rescue plan work and the
private firms flourish in the months and years ahead. The White House also
agreed to strict oversight of the programme by a Congressional panel and
conflict-of-interest rules for firms hired by the Treasury to help run the
programme.
The administration had initially requested virtually unfettered authority
to operate the bailout programme. 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, Mr Henry M. Paulson Jr.,
emerged from behind closed doors to announce the tentative agreement at 12.30
am on 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, US Democratic la-wmakers, 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 George W. Bush; between the
treasury secretary, Mr Paulson, and the two presidential candidates, Senator
John McCain and Senator Barack Obama; and between the candidates and top
lawmakers.
deccan.com
An economist is a man who states the obvious in terms of the incomprehensible.
-- Alfred A. Knopf
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