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Congressional leaders and the White House agree on a bailout plan that will aid troubled financial firms, but now it must be passed by Congress. The Wall Street Journal reports the bill, which would "effectively nationalize an array of mortgages and securities backed by them -- instruments whose deteriorating value has clogged the nation's financial system," was finished late yesterday, and Speaker of the House Nancy Pelosi says it's "frozen"--as in no more changes.
Here's a NY Times graphic with an overview of the bill's details (the program is run by the Treasury secretary, but in consultation with the Fed, SEC, HUD, and Federal Home Finance Agency; "steep tax consequences" for some executives making more than $500,000). Dealbreaker liveblogged the Treasury Department call: "Some guy from Treasury says he wants people to focus on legislation, not implementation. One of his colleagues says he thinks that's a 'very good idea.'"
President Bush hopes that Congress will pass the bill quickly, "A vote for this bill is a vote to prevent economic damage to you and your community...We will make clear that the United States i serious about restoring stability and confidence in our system." He even referred to the plan's expense, saying "much if not all of the tax dollars will be paid back." Read Bush's full statement here.
However, it's expected to be a tough vote and Asian and European stock markets were/are jittery. CNBC reports that central banks overseas "continued to pump cash into the system to try to persuade fearful financiers to lend to each other."
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this.is.bullshit.
Can I get a reach around as well since I am paying for this?
You guys are just so clueless. We're talking about the total implosion of the banking system here and that means no loans for anyone for anything. Good luck getting a student loan, buying a house, or running a small business regardless of your credit. This is not a Wall Street handout, it's an investment in the country to stop bank failures and keep regular people out of bankruptcy court.
Just look at the markets today - there's basically a guarantee the government is going to pass this thing and the markets are still down 300 points in the first 30 minutes of trading, another major bank is basically gone and the European banks are getting their own bailouts left and right. Imagine what it would be like with no plan at all? I know everyone on this site only thinks rich people own stocks, but most of America depends on them for retirement savings. Can you imagine being 60 right now and watching your nest egg evaporate?
So we're supposed to allow ourselves to be robbed by improvident, reckless rich wastrels in order to keep our pittances?
sidenote,
You really think there will be a problem getting a loan in couple of years? Let the markets sort themselves out (with proper regulation of course). When there's profit to be made, there will always be someone to offer the service.
Instead, the people in charge of overseeing the markets and the economy are panicking. They slept through the crisis. They deregulated the industry, in the time when they should have created regulations for the new credit markets.
Now the taxpayers have to bailout the banks. Yes, BAILOUT, because you, me and everyone else will pay to stop the banks' losses.
Check out this bill, included are things like: government taking partial ownership of some companies, government owning mortgages, government controlling salaries. This is communism.
Palin will swoop in and solve it.
It's not about will you ever be able to get a loan again, it's about what will happen if people and business with good credit that didn't do anything wrong are punished because of Wall St.'s mistakes. Those people just can't go without loans while this whole thing just shakes out. Like you said, YG, it'll take years and alot of those people will go bust between now and then.
I'm not arguing that the government was asleep at the wheel here and that a lot of people made a lot of money getting us to this situation. That's not the issue. You want to be pissed off about that, join the club. But like it or not, this country would be headed toward a major depression if we just sat and did nothing. This plan is a rescue, not communism.
You mean Palin will swoop in on a jesus horse and solve it.
The original Paulson plan was basically handing over the control of up to $1 Trillion to him with no oversight into how he was going to use it. Hypothetically if his version of the plan was rubber stamped through congress and the white house he could have technically taken the money, bought an island in the south pacific and created an army of mutant monkey clones to build neutron bombs to smite his enemies.
Well, again, rescue of whom?
The immediate beneficiaries would be the banks, and I have no sympathy for them. Not because I have some prejudice against banks, quite the opposite - I think people who make good business decision should be rewarded, and those who make bad business decisions deserve to fail.
Then there are the people who are trying to take out the loans. They would benefit as well, but really, people with good credit rating would get a loan anyway. It just would be more expensive. But that's not so bad: sellers still need to sell, so they will be forced to lower their prices. The real estate market is way overpriced anyway.
And yes, I know there are severe problems with securing a loan right now, even for good customers. Well, too bad, that's how market economy works, but wait a year, and you'll be able to get a load for that McMansion you've been dreaming about.
Insofar as I can understand the bailout proposal -- the craven Democrats are hanging bells and whistles on it to make it more palatable to their justly outraged base -- the money is to be used to reinflate the real estate and equity markets, thus recreating the situation which led to the present crisis. It is not a solution, it is not even the suggestion of a solution. It is a recreation of the problem on a larger scale.
If you're going to have capitalism, you have to allow for its destructive seasons, or it's not going to work.