Breakthrough in US talks on Wall Street bailout
Monday, 29 September 2008

AFP, WASHINGTON - US lawmakers said they had reached a "breakthrough" in negotiations early Sunday and were poised to announce a formal deal on an unprecedented 700-billion dollar Wall Street bailout to avert the country's worst financial crisis since the Great Depression.

Senate Democratic Majority Leader Harry Reid attributed the fresh progress to a last-minute intervention by House Speaker Nancy Pelosi.
"It's been a very long day. Quite frankly, a long week. This evening has been extremely difficult," Reid said after US lawmakers worked feverishly into the early morning hours.
"The breakthrough came about an hour ago, with the speaker coming with an idea that hadn't been formulated. But it was enough to get, I think, this so we can commit it to paper."
"We have made great progress," agreed Pelosi after the impromptu press conference. "We have to get it committed to paper, so that we can completely, formally agree."
US Treasury Secretary Henry Paulson, who also joined the talks in Congress, said: "We've made great progress toward a deal, which will work and will be effective in the marketplace, and, you know, effective for all Americans."
But other lawmakers, especially on the Republican said they were more cautious on what would be the largest government bailout of struggling financial institutions since the Great Depression of the 1930s.
Senator Judd Gregg, a leading Republican negotiator, said he would be looking at the final wording of the agreement Sunday and consulting with colleagues before giving his final approval.
"I think we are going to be able to have an announcement tomorrow, but these are difficult issues," he said.
Republican Representative Roy Blunt said he would have to take the proposal back to his caucus before committing his support for it.
However, White House spokesman Tony Fratto said President George W. Bush and his aides were "very pleased with the progress" made at the talks.
The New York Times reported the bill includes pay limits for executives whose firms seek help and requires the government to make more aggressive efforts to prevent home foreclosures.
In some cases, the government would receive an equity stake in companies that seek aid, the newspaper reported. The White House has also reportedly agreed to strict oversight of the program by a congressional panel.
US lawmakers have struggled to reach a deal on the 700-billion-dollar original plan put forward more than a week ago by Paulson, who was criticized for failing to provide enough oversight.
The Paulson plan initially called for the government to use tax dollars to buy up bad loans, including mortgages, and hang onto them to provide greater liquidity for financial institutions.
But rebel Republicans instead drafted an alternative plan, calling for an expanded insurance system financed by banks to rescue individual home mortgages, so taxpayers do not have to fund the bailout.
The proposed bailout, first rushed to Capitol Hill by Paulson as a three-page proposal, has now ballooned into a document of more than 100 pages, CNN reported.
Democratic White House hopeful Barack Obama hailed the progress made, saying: "The breakthrough between Congress and the administration is the culmination of a sorry period in our history, in which reckless speculation and greed on Wall Street and lax oversight from Washington led to a meltdown of our financial markets."
But he cautioned: "When taxpayers are asked to take such an extraordinary step because of the irresponsibility of a relative few, it is not a cause for celebration. But this step is necessary."
With the world's largest economy in a tailspin, other governments are nervously watching the talks, concerned their economies could fall victim to any contagion.
International Monetary Fund chief Dominique Strauss-Kahn said in an interview published Sunday that the world body needed to tighten its control over financial markets.
The IMF was "ready to do what is required if we are given the mandate," he said, adding the world faced "financial anarchy" now as it did in 1944 when the IMF was set up in the aftermath of World War II.
"We can have national or regional authorities, such as the European Union for example, but we need a global guarantor, an institution which monitors standards," Strauss-Kahn told France's Le Journal du Dimanche.

Comments Add New
SHow Me the Money  - Janitor |2008-09-29 15:59:32
Show me the document so I can bask in it glow of greatness oh great congress of mine. Anyone post a link to the ducument please.
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