Senate Banking, Housing, and Urban Affairs Committee Chairman Sen. Christopher Dodd, D-Conn., center, met with other Congressmen on the financial crisis Thursday on Capitol Hill. (Lauren Victoria Burke/AP)
Congress wrestles with Wall Street bailout package
Is there a deal or not? It depends on who’s asked, but an outline is emerging from Thursday’s meeting at the White House.
By Gail Russell Chaddock | Staff writer/ September 25, 2008 edition
Washington
The on-again, off-again agreement on a national financial rescue plan reveals the thorny political problem now facing Congress: How do you bail out deeply unpopular Wall Street firms without incurring the wrath of voters six weeks before an election?
It’s likely to be an equally difficult vote for many members of Congress, who have been deluged with protests from voters over the prospect of a taxpayer-funded rescue package.
“I don’t believe we have an agreement,” said Sen. Richard Shelby (R) of Alabama, the top Republican on the Senate Banking panel, after Thursday’s White House meeting.
But just hours before that meeting to break a deadlock over a historic bailout of US financial markets, congressional negotiators announced that there was no deadlock.
“We’ve reached a fundamental agreement on a set of principles,” said Sen. Christopher Dodd (D) of Connecticut, who chairs the Senate Banking, Housing and Urban Affairs Committee, flanked by other senior members of House and Senate banking panels.
“I now expect we will indeed have a package that can pass the House, pass the Senate, and be signed by the president,” added Sen. Robert Bennett (R) of Utah.
Just minutes after that midday announcement, the top House Republican on the banking panel split ranks, however. “There was not a deal made,” said Rep. Spencer Bachus (R) of Alabama, in comments to reporters just off the House floor. “There was progress on the issues.”
At issue are two narratives that converged at the White House today: One is how to rescue a battered financial market; the other, how to revive a slumping presidential campaign.
Key lawmakers on Capitol Hill moved quickly this week to come to terms on a sweeping $700 billion bailout. Conservatives on both sides of the aisle balked at the size of the bailout and the vast expansion of government authority that it implied. Lawmakers across the spectrum worried that the Treasury Department’s three-page plan included no oversight ¬ and even ruled out challenges from the court.
Both the Senate and House produced draft bills, but wide areas of disagreement persisted.
Without releasing details of their proposal, which they said had yet to be vetted with the Treasury Department, lawmakers said they had come to terms on four contested areas. These include: authority for the Treasury Secretary to rid financial markets of “toxic” assets, limits on CEO compensation for companies seeking taxpayer help, new oversight capacity, and provisions for homeownership preservation.
“We’re in a serious crisis if we don’t pass legislation,” said President Bush said at the opening of Thursday’s meeting, which included presidential contenders John McCain and Barack Obama, as well as top congressional leaders.
“All of us around the table take this issue very seriously, and we know we have to get something done as quickly as possible. My hope is that we can reach an agreement very shortly,” Mr. Bush said.
Whatever the outcome, it’s likely to be a tough vote for many members of Congress, who have been deluged with protests from voters over the prospect of a taxpayer funded bailout for Wall Street. The most conspicuous holdouts have been House Republicans, who have met five times as a group times in the last 48 hours over the issue.
“When we’re dealing with something this important, it’s important to have alternatives,” said Michael Steel, a spokesman for House Republican leader John Boehner.
Soon after Senator Dodd and others announced a deal on a bailout, House Republicans released their own recovery plan, which opts for mortgage insurance, rather than an outright government purchase of troubled assets, to calm troubled markets.
“The purpose is to try to break the logjam so we can leave here Sunday with a bill passed that frankly puts the onus on Wall Street, not the taxpayers who have lived by the rules, in order to fund this recovery,” says Rep. Eric Cantor (R) of Virginia, who headed the 10-member working group.
“We’re reaching out not only to members on our side of the aisle, but also to Democrats. We found a lot of positive reception to this notion: That families in this nation … should not have to pay to bail out Wall Street,” he added.
Instead of a $700 billion bailout, House Republicans propose an insurance plan, similar to what the Government National Mortgage Association (Ginnie Mae) already does to help mortgage lenders in low-income areas. “Currently, the federal government insures approximately half of all mortgage-backed securities (MBS). We can insure the rest of current outstanding MBS; however, rather than taxpayer funding insurance, the holders of these assets should pay for it,” the group said in a statement.
In the run-up to Thursday’s meeting, both Speaker Pelosi and Senate majority leader Harry Reid said that they would not bring a bailout plan to the floor without a significant number of Republican votes – about 110 in the House and 30 in the Senate. That’s the key target group for the Bush White House – and, more recently, Senator McCain – in a bid to pass a bailout bill as early as this weekend.
“People agree that inaction is not an option, but I also believe that there is a broad agreement that the Paulson plan is not the only plan,” says Rep. Jeb Hensarling (R) of Texas, who heads the conservative Republican Study Group.
Comments
2. Sammy | 09.25.08
Josephine,
I agree totally. What do hardworking people do now? I no longer see a reason to work hard in America. After years of working and sacrificing, I’m convinced the best way to survive in America is to be a crook and ***** (move to Hollywood?). Sad.
3. PacificGatePost | 09.26.08
WHO SHOULD OVERSEE THE FIX and WHO SHOULD BE HEADING TO JAIL?
Too many have fed at the trough. What Fannie Mae and Freddie Mac executives did was illegal. Taking their cash favors was morally bankrupt.
http://pacificgatepost.blogspot.com/2008/09/fanny-mae-freddie-mac-congressional.html
Still no time to panic, but some executives and some in Congress should see jail time.
….AND, How about starting with all Senators who took cash from Fannie and Freddie?
4. Absolution0 | 09.26.08
What’s interesting is that the idea of loaning these banks money at interest or a set percentage penalty, has been tossed around. However, there is a fear that the companies won’t take the money if it’s a loan.
I find it terribly ironic that the people who get to make this decision are also the ones who gave out bad loans to pad their pocket. Somehow the idea of paying interest, rather than receiving it, just doesn’t make sense when you’re already a millionaire.
Don’t punish the companies. But let them pull themselves out of this mess. There’s been money in judicious and prudent banking for hundreds of years. Maybe they’ll learn to understand what their customers go through.
If they don’t want it…too bad, we’ll find another company that will.
5. Abbie Reinard | 09.26.08
I could not agree more with Josephine. My family has been budgeting, spending smart and paying taxes for as long as I can remember. Why is it that the US Government wants to continue to punish those of us who play fair and stay within our means? If this bailout happens, I will feel that I might as well get over my head in debt and start behaving badly. Except for me, it will be too late. The bailout will have already happened.
WHY DO WE REWARD BAD BEHAVIOR?
6. Robert sachs | 09.26.08
I dont agree with a bail out to the banks for the problems encountered due to their own greed. After hearing banks making record profits every year from ripping people off.
If their is some sort of bail out, then the banks that receive this should be held accountable. They need to pay back the amount of money to the government within a five year period at a set interest rate.
When the government receives this payback it should then be forwarded equally to every tax payer.
If the banks dont like terms then no bail out, let the system recover on its own.
This banking problem has a far reaching affect, not just on the US.
7. S Barringer | 09.26.08
WHY DO WE REWARD BAD BEHAVIOR?
Reply: We, the American taxpayer who plays by the rules doesn’t reward bad behavior. The criminals in Washington do because they know that crime does pay!
I’ve come to the conclusion that the only way to “get ahead” and accululate any kind of wealth for yourself and your family is to go crooked. If you play it straight and by the rules (made by Washington and the lawyers) you’re going to lose. The system has been desiged for you to lose. I know that if I’m pressed real hard to take care of my own, I will have to go underground and not play by the rules any longer in order to make it. I feel I don’t have any choice left. You have to find a way to work outside their system and remain undetected by them. It’s about survival.
8. Charles Saint | 09.26.08
Time for a revolution
Bush I truly think he should be impeached and charged with “Not having the best interest of the American people”
That’s not a law but there should be one like that. If any government official does not have the America people at there first and foremost interest, they should go to jail. Like that guy, a senator I think, in Alaska that is being prosecuted for having $100,000.00 of things done to is house. His defense is that he didn’t know they put that much money in his house. Come on does he think were all idiots. Obviously he does or he wouldn’t have done it. OH yeah and our potential Vice president came from that state, wonder what gifts she has received?
Most likely he will get out of it and the police arrest people for smoking pot.
This morning because I was up at 2:30 AM (couldn’t sleep) watching TV, I saw an interview of Palin with Katie Currac(Or whatever her name is), she is an idiot. She said she has foreign diplomatic experience because Alaska is next to Canada and is close to Russia. That means everyone who live in a state that are next to Canada are qualified to be foreign diplomats. Everyone in Michigan, Wisconsin, New York, Maine, Minnesota, North Dakota, Montana, Washington and lets not forget Texas and California because there next to Mexico, has the qualification to be a foreign diplomat.
I truly feel the American public should have a revolution, not a war type but a revolution where… We want the truth or your out. PERIOD. ALL Governmental official work for US, the American citizen. No second chance, if a politician lies, he or she is out and prosecuted for lying. If we are miss-led. Charged with conspiracy. Enough is enough.
To quote the constitution “WE THE PEOPLE” have had enough.
Where is all this bail out money really going? Who’s pockets, is it paying for the Iraq war?
I want to see where every dime is going.
Keep in mind this new slogan “Bush the Crook” “Bush the Crook” If anyone really believes averything that man says, you have fallen for his BS.
9. Arafinwe | 09.26.08
That something must be done is undeniable and the taxpayers may have to eat this one. However, (and this is a big however), the method employed to steady the economy must accomplish two things which are far more important than saving the particular financial institutions which now seek help. One, there must be absolutely no incentive established for any lending corporations to go out on a limb like this in the future. If this means severe penalties against the CEOs who engineered this mess, so be it. Secondly and most importantly of all, government funds need to make their way down to the grass roots level of the homeowners. This is the only long term and sensible way in which the economy as a whole will stabilize and strengthen. Simply shoring up the big institutions will do little to accomplish this. If anything it may make things worse.
Many of us have tried to live a dream based on credit, families and giant corporations alike. In and of itself this is not necessarily a bad thing. The concept of “continued economic growth” coupled with seemingly limitless speculation built on a foundation of credit is the problem. It is time to shift our thinking towards the security of sustainability and away from the current economic madness which behaves more like cancer than any kind of healthy proliferation.
10. Ted quirk | 09.27.08
There is an old addage on Wall Street
The BULLS make money
The BEARS make money
The PIGS go broke
What we hear today are the massive squeals of the pigs!!
11. Geoff Miller | 09.28.08
How many people feel if the 700 Billion bailout goes through, should have to pay ANY taxes from here on out? I don’t. I know a lot of people who wouldn’t have considered it before, now tend to agree. The way I figure it, congress wants to just give away any hopes of retirement for most of America. Don’t pay taxes. What are they going to do? Take your house away?
Seriously though. America withholding taxes to the federal government would send one **** of a message.
12. Jack | 09.28.08
How in the world can you put the people who, either caused, or help cause the bailout problem, in charge of oversight of the bill? The Chairman of the Fed Res Sys, The Sec of Trea, the Director of Fed Home Fin Agency, The Chairman of the SEC, and the Secretary of Housing and Urban Dev.
Trackbacks/Pingbacks
Leave a Comment
We do not publish all comments, and we do not publish comments immediately. The comments feature is a forum to discuss the ideas in our stories. Constructive debate - even pointed disagreement - is welcome, but personal attacks on other commenters are not, and will not be published.
Tip: Do not write a novel. Keep it short. We will not publish lengthy comments. Come up with your own statements. This is not a place to cut and paste an email you received. If we recognize it as such, we won't post it.
Please do not post any comments that are commercial in nature or that violate copyrights.
Finally, we will not publish any comments that we regard as obscene, defamatory, or intended to incite violence.
1. Josephine Richards | 09.25.08
It is not up to the people of the USA who have been paying their bills, paying their taxes and maintaining as best they can a level way of living to bail out all the idiots that want to and have been stealing our money. All of these thieves, murders and malicious gangsters should be forced to give up their own money, their own property, everything they own, and destory themselves instead of the American People. Instead of what they want to be have happen to the American People, should happen to them instead.
The coffins they have been digging for others, should be filled with the bodies of their own families, children, etc., let evil destroy itself.