By Carl Hulse and David M. Herszenhorn
WASHINGTON
The House braced for a difficult vote set for today on a $700 billion rescue of the financial industry after a weekend of tense negotiations produced a plan that congressional leaders portrayed as greatly strengthened by new taxpayer safeguards.
The 110-page bill, intended to ease a growing credit crisis, came after a frenzied week of political twists and turns. The measure still faced stiff resistance from lawmakers who portrayed it as a rush to economic judgment and an undeserved aid package for high-flying financiers who chased big profits through reckless investments.
But leaders of both parties in the House and Senate intensified their efforts to sell reluctant members of Congress on the legislation. They said it had been significantly improved from the Bush administration's original proposal.
The final version of the bill included a deal-sealing plan for eventually recouping losses: If the Treasury program to buy and resell troubled mortgage-backed securities has lost money after five years, the president must submit a plan to Congress to recover those losses from the financial industry. Presumably that plan would involve new fees or taxes, perhaps on securities transactions.
"This is a major, major change," Speaker Nancy Pelosi said Sunday evening as she declared that negotiations were over and that a House vote was planned for today, with Senate action to follow.
The deal also would restrict gold-plated farewells for executives of companies that sell devalued assets to the Treasury Department.
President Bush called the measure "a very good bill" and praised congressional leaders.
"This plan sends a strong signal to markets around the world that the United States is serious about restoring confidence and stability to our financial system," Bush said in a statement. "Without this rescue plan, the costs to the American economy could be disastrous."
House Republicans had threatened to scuttle the deal and proposed a radical alternative that would have focused on insuring troubled debt rather than buying it. In the end, the insurance proposal was included on top of the purchasing power, but there is no requirement that the Treasury secretary use it, leaving them short of that goal.
It is virtually impossible to know the ultimate cost of the rescue plan to taxpayers, but congressional leaders stressed that it would likely be far less than $700 billion. Because the Treasury will buy assets with the potential to resell them at a higher price, the government might even turn a profit.
The bill calls for disbursing the money in parts, starting with $250 billion followed by $100 billion at the discretion of the president. The Treasury can request the remaining $350 billion at any time, and Congress must act to deny it if it disapproves.
That new provision, pushed by House Democrats, was the last to be agreed to in a high-level series of talks that had top lawmakers and White House economic advisers hustling between offices just off the Capitol Rotunda until midnight Saturday, scrambling to strike an agreement before Asian markets opened Sunday night.
Pelosi, Treasury Secretary Henry Paulson and others taking part in the talks announced that they had clinched a tentative deal at 12:30 a.m. Sunday, exhausted and a little giddy after more than seven hours of sparring. There were several tense moments, none more so than when Paulson, a critical player, suddenly seemed short of breath and possibly ill. He was tired but fine.
Trying to bring around colleagues who remained uncertain of the plan, its architects sounded the alarm about the potential consequences of doing nothing. Sen. Judd Gregg of New Hampshire, the senior Republican on the Budget Committee and the lead Senate negotiator, raised the prospect of an economic catastrophe.
"If we don't pass it, we shouldn't be a Congress," Gregg said.
Both presidential candidates, Sen. John McCain of Arizona, the Republican nominee, and Sen. Barack Obama, the Democratic candidate, gave guarded endorsements of the bailout plan. Both McCain and Obama had dipped into the negotiations during a contentious White House meeting Thursday.
On Sunday evening, both parties convened closed door-sessions in the House to review the plan, and conservative House Republicans remained a potential impediment.
But the party leadership was circulating information aimed at refuting some of the main criticisms of the bailout, indicating they were poised to support it.
"I am encouraging every member of our conference whose conscience will allow them to support this bill," said Rep. John Boehner of Ohio, the Republican leader.
A series of business-oriented trade associations with influence with Republicans also began weighing in on behalf of the plan.
"The Chamber believes the legislation contains the necessary elements to successfully remove the uncertainty and stem the turmoil that has plagued financial markets in recent weeks," the U.S. Chamber of Commerce said in a statement Sunday.
Members of the conservative rank-and-file remained unconvinced.
Ssome Democrats bristled that they were now being called on to do the financial bidding of an administration they had viewed as previously uncooperative in dealing with executives who had performed irresponsibly or worse.
But others said the support from the two presidential contenders, McCain and Obama, should provide some comfort to nervous lawmakers.
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the 800 point drop in the stock market equals
over $1 Trillion dollars in stock value, which could include your rtirement fund. Think about it!
It's a matter of a shell game
All this plan does is take all these risky debts away from Wall Street and transfer them to the federal government. What happens if this "toxic debt" continues to decline in value? Then we, the taxpayers, are left holding the bag. Please call or email your senators and congressman and tell them to vote NO to this nonsense.
The funny thing about "bailouts"...
...is that they don't save the plane, just the person who was flying it.
Bailout
The House and Senate members had better brace for the next election. I think they are in deep s--t....and they knbow it. VOTE THE BUMS OUT and replace all of the jerks. Can we do any worse/// NO!
LEAVE PARTISANSHIP BEHIND! VOTE THE INCUMBENTS OUT !....
The ridiculous argument that congress is making boils down to one basic premise: that these 2 ordinary guys (one who never lead anything other than a classroom and the other who made his fortune gambling on Wall Street) can all of a sudden predict with certainty the economic future of this country. If these 2 guys were so smart why weren’t the ringing the alarm bill months ago?
The fortune tellers however do deserve credit for accurately predicting that top congressional leaders were so beholden to Wall Street for years of financial support that they would work weekends in backrooms to get the big fix in. However it still begs the question that: if this really is a national economic crisis then why are our legislatures negotiating the details of the solution in secret behind closed doors instead of on the floor of the houses.
You would think that given that the cost of this bailout is almost $10
oh nancy
well nancy pelosi said "the party is over on wall street,no longer will the tax payers bail you again",well here's the problem mrs.pelosi!how about the party in DC the Distirct of Corruption!you are part of the problem,you may have your voting base fooled,but not me.you are the biggest hack ever to grace the streets of Georgetown! your approval rating is worse than the presidents,and you have some nerve to critisize the president. you make my stomach turn everytime i see lying through your dentures!.if anyone wants to hear the truth go to any ron paul blog or even his website and let the master tell you the truth and where the blame lies.yes the current Admin. is'nt the angel we all wish we could have,but to place blame on bush,is so irresponsible! so go my fellow posters place blame on bush,as you do everything else,lets see how you react if obama get elected,when he screws up!i doubt with the unrelenting diatribe,that you all place on bush!
Get rid of Credit!
I was always told to pay for eveything in cash! If you can't afford it, then you shouldn't and don't need it. CREDIT only makes the creditors richer. You want something? Save for it!
Fool me twice.....shame on me!
The "elephant in the middle of the room", that no one on either Wall Street or Pennsylvania Avenue wants to talk about, is a gambler's dream known as "credit default swaps". Ask your friendly Investment Banker, if he's still taking calls, if this wasn't a main reason that Bear Stearns, Lehman Brothers and AIG became casualties so quickly. I'd wager a bag of Euros that once this bailout of the fat cats becomes law, you'll be hearing more and more about this $62 trillion (yes trillion) dollar time bomb.
I can't believe that the Congressional sheeple are once again being hoodwinked into passing bad legislation under the "Chicken Little sky is falling mantra" of George Bush and his sycophants. "Hurry, hurry, or we'll all lose our jobs, our houses, our wives, our children.....vote yes....vote yes....do it today!" Hogwash! "Fool me once....shame on you.....fool me twice.....shame on me!
Reality
Is that unless companies have access to loans and credit, businesses will flounder and people will lose their jobs. Lenders cannot give credit right now because of these toxic securities that have been traded around the world over the past few years. If businesses cannot get credit, then they cannot pay for employees, and many people will lose their jobs. In the business world people operate on debt. They will make a profit, but they use the credit to pay for projects to get started. If there is no credit, then new business projects will not start, and more money will be lost in the future. This is the reality of the situation. Like it or not (and I don't), something has to happen because we will all be affected. We can point fingers and play the blame game, but we are all to blame. If you've bought a plasma TV on credit because you could pay the 22% interest, then you are part of it. If you take out financing plans to buy cars, you are part of it. Yes, this stemmed from housing, but we created the system by believing that you could have whatever you wanted, even if you couldn't afford it.
bailout
It is true what everyone is saying about the banks and institutions being part of the problem. However, I believe the same amount of anger and blame should be leveled at the Conress and the committies such as the bankink and finance committies who should have been watching what was happening. So when we talk about removing CEO's and the like, it should be said that those politicians should also be fired.
Not my problem
The banking industry got itself into this mess due to poor management, poor investment and greed. Now my wallet is being emptied to pay for their stupidity. The CEO and BOD of every bank being given a taxpayer bailout should be fired with no benefits, and newly elected management should be put in place. Every taxpayer, who now has a major inventment in the bank, should be given the chance to vote.
cash only
Credit card debt laws need to be looked at too. The banks have had a field day with changing the rules in the middle of the game. They have easier access to our credit reports than we do. I say cut them up and pay as you go. It's ok to to say "I can't afford it"!!!!
NO
BAILOUT!
no bailout
This deal is a slap in the face to every taxpayer who's worked hard and lived within their means.
Adding Fuel to the Fire
America got itself into this credit-crunch because the average person was carrying more debt than they could afford due to rising property taxes, increase cost of oil and groceries, and for some rising adjustable rates on their mortgages. Everyone in the lending chain from the borrower to the CEO's who crafted aggressive lending practices are at fault. So, rather than society adopting an attitude of "I am too far into debt let me pay some of it off and not take out any more loands" the government wants our tax dollars to bailout Wall Street so that Main Street can take on even more debt... which adds fuel to the fire.