Politicians prepare bailout while economists tell them to wait and voters tell them not to do anything, guess who wins
U.S. lawmakers said they made a breakthrough in talks on a $700 billion plan to revive the credit markets and expect to announce an agreement on legislation later today. Negotiators resolved “our differences so we can go forward with a package to stabilize the market,” House Speaker Nancy Pelosi told reporters when talks at the Capitol ended after midnight Washington time.
Treasury Secretary Henry Paulson said the proposed deal “will work and be effective” in the marketplace. More work needs to be done, “but I think we’re there,” he said.
Bush spokesman Tony Fratto said early this morning that administration officials are “pleased with the progress tonight and appreciate the bipartisan effort to stabilize our financial markets and protect our economy.”
Senator Kent Conrad, a North Dakota Democrat who chairs the Budget Committee, said $250 billion would be immediately available and another $100 billion could be used when requested by the president for debt purchases. Congress could bar the expenditure of the remaining $350 billion only by passing a resolution to block it from being spent.
The package includes a provision aimed at “preventing golden parachutes” for executives of companies who leave firms that have sold troubled assets to the government, Conrad said.
Companies that sell debt to the government will issue stock warrants to the government so that taxpayers “can gain as companies recover” from economic difficulties, Conrad said.
A proposal that would allow judges to modify mortgage terms for struggling borrowers in bankruptcy proceedings wasn’t included, said Dodd, a Connecticut Democrat. “We pushed very hard” for the bankruptcy provision, “but we feel we got good foreclosure mitigation language in there,” Dodd said.
Democratic presidential nominee Barack Obama said the plan “appears to embrace” his principles that the legislation include oversight by an independent board; protections for taxpayers to ensure they receive any profits; measures to help homeowners stay in their homes; and rules to make sure “CEOs are not being rewarded at taxpayers’ expense.”
“There were a series of breakthroughs here in the end” and the agreement on executive compensation “was certainly the most important,” Conrad said. He declined to give further details because the language being drafted by lawyers is “quite complicated.”
Taxpayers will not see a dime of any possible profits… the GOVERNMENT will. What Mr. Obama means is he will be less likely to tax the shit out of us if the happen to make a few pennies from this ‘deal.’ Which is highly unlikely. It really hits home I hope, especially after reading below, that these politicians are not representatives of the people. They represent big business and the elite. It has always been like that and always will. The potential the government has due to its assumed role is a incredible draw on those who would like to use that power for their own interests. It is an inherently flawed system and no ammount of wishful thinking or “getting in the right guy” will fix it.
