There is no question that most of the American, even the world wants the bailout plan to be approved. But the key question is – will it work, or “soft-landed” the financial crisis to minimum impact.
from WSJ.com:
The emerging plan to rescue wounded U.S. financial markets received the tentative support of both presidential candidates and key lawmakers Sunday, as days of haggling over the $700 billion package appeared to be coming to a close.
‘I’d like to see the details, but hopefully, yes,’ Sen. John McCain, (R., Ariz.) said when asked on ABC’s ‘This Week’ if he would support the plan. ‘The outlines that I have read of it, this is something that all of us will swallow hard and go forward with. The option of doing nothing is simply not an acceptable option.’
Lawmakers plan to vote on the bailout measure on Monday. Final details haven’t been released yet, but the agreement will include significant oversight of the Treasury Department’s purchases of troubled assets, executive compensation restrictions, the potential for equity stakes in firms that participate in the asset-sale program, and other taxpayer protections.
‘I’m not happy with the whole situation, but we have something we can support,’ House Speaker Nancy Pelosi (D., Calif.) said Sunday.
Sen. Barack Obama (D. Ill.) in remarks prepared for delivery at an event in Detroit, predicted swift passage of the bailout, which he said will include conditions he advocated.
‘Today, thanks to the hard work of Democrats and Republicans, it looks like we have a rescue plan that includes these taxpayer protections,’ Sen. Obama said. ‘And it looks like we will pass that plan very soon.’
The plan also received the support of the U.S. Chamber of Commerce. R. Bruce Josten, the lobbying group’s vice president for government affairs, said the package is big enough to be effective and flexible enough to be implemented quickly.
Overcoming Republican Opposition
The bailout compromise comes after House Republicans revolted against Treasury Secretary Henry Paulson’s initial proposal, which they complained was too costly and would cede too much power to the government. Their opposition to the pact derailed what Democrats, the White House and Senate Republicans believed was a preliminary deal on Thursday, forcing the negotiations to begin anew.
According to a summary of the final text of the legislation, the Treasury would be required to establish a mandatory industry-funded program to insure the soured assets it acquires through the Wall Street rescue plan. The inclusion of the insurance idea is a victory for House Republicans who had argued that taxpayers shouldn’t be left on the hook as part of the plan.
The summary, obtained from a congressional aide, said the Treasury would obtain equity warrants from companies participating in the program to help ensure the taxpayer would benefit in the future if the share prices of the firms increased.
t also states that the Securities and Exchange Commission will be given the authority to suspend mark to market accounting rules if the agency deems it necessary. And it authorizes the Federal Reserve to start paying interest on the regulatory reserves it requires financial firms to hold for capital adequacy reasons in 2008, rather than in three years’ time as it is currently scheduled to do.
The summary details the limits that would be imposed on senior executives at companies taking part in the scheme. They would differ depending on whether the Treasury directly purchased the toxic assets from a company or if the firm participated in an auction process to sell mortgage-linked assets to the federal government.
The board established to have oversight responsibilities of the bailout package would be comprised of the Treasury Secretary, the Fed chairman, the SEC chairman, the director of the Federal Home Finance Agency and the Secretary of Housing and Urban Development.
There would also be a separate oversight board created by Congress, and also oversight responsibilities held by the Federal Deposit Insurance Corporation, the U.S. Comptroller General and the creation of a Special Inspector General.
The full text of the legislation underpinning the $700 billion bailout is expected to be released by Congress later Sunday, before the Asian markets open.
Rep. Eric Cantor (R., Va.), who led the House Republican opposition, said he would have to see language on a proposal to require financial companies contribute to a mandatory insurance plan before declaring his full support.
‘I’m not ready to say a deal is done,’ Rep. Cantor said in an interview on CNN Sunday.
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