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U.S. lawmakers expected to pass $700 B bailout
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CTV.ca News Staff
Date: Sun. Sep. 28 2008 8:13 PM ET
The White House and congressional leaders agreed Sunday to a massive US$700-billion bailout for the U.S. financial sector, after a deal was made for legislators to share spending controls with the administration.
The deal won the tentative support of both presidential candidates, Sens. John McCain and Barack Obama, and is set to go to the House of Representatives for a vote Monday.
The plan is intended to keep credit flowing, to rescue bankers from bad loans that could derail the U.S. and global economies.
Congress has insisted on controlling more of the $700 billion than the White House wanted. Legislators had to walk a tricky line between angry voters who care little about Wall Street bankers and the administration who are forecasting financial disaster without action.
The final bill was released Sunday night as lawmakers met privately to figure out how to vote.
"This isn't about a bailout of Wall Street, it's a buy-in, so that we can turn our economy around," Democratic House Speaker Nancy Pelosi said.
The bill would be the largest government intervention in the financial markets since the Great Depression.
U.S. President George Bush has also expressed confidence that the plan could be passed. But he acknowledged that Americans are angry that so much taxpayers' money could be used in the bailout for Wall Street's mistakes.
Bush will address the nation at 7:35 a.m. EDT Monday morning about the bailout plan.
Analysts, however, expressed caution whether the deal would be passed, even though leading lawmakers on Capital Hill says it has the votes to pass.
"It's not over until it's over. They've got to read the fine print," Vincent Reinhart of the American Enterprise Institute told CTV Newsnet on Sunday.
A group of House Republicans had objected to aspects of the initial bailout package. Some GOP leaders said they didn't like the idea of government intervention to prop up failing private enterprises.
"They'll be justifiably appalled. It does really raise the issue of fairness -- the idea that you would provide funding to the former masters of the universe during bad times when you don't take back the money they earn in the good times," said Reinhart.
But he noted that the bailout is necessary to prevent an economic freefall.
Negotiations to finalize details of the bailout are being watched closely by international investors and governments. Stock markets around the world have seen significant fluctuations and declines over the past two weeks.
Industry Minister Jim Prentice told CTV's Question Period that Canada has a strong banking sector. But he added that Canadians will be impacted by what happens in the U.S.
"Our officials are monitoring this very closely. No country is an island, and certainly there will be consequences for Canada with what happens in the American economy. But we've had very sound fiscal finances in the government of Canada," Prentice said.
With files from The Associated Press
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I applaud the budget, even though Health Care and education may stay unscathed. Sadly this cannot last and I worry to later this year where cuts will become enviable. If anything, this provides the Wildrose Alliance plenty of ammo when an election is called.


Comments are now closed for this story
Lowell
said
Kirk
said
However, why do I have this feeling we'll be back at this in another ten years?
BB in B.C.
said
jeff
said
Lyn
said
patrick
said
No bonuses,stock options, until this "loan" is repaid and they turn a profit.
DCR-Toronto
said
James
said
good investment america!!
Prof. Pye Chartt
said
The orchestration and administration of this bailout will require some transparency; in order for the public to be remotely satisfied that the same bozos who sunk their own ship don't get rewarded for their stupidity.
It will be interesting and rather fascinating to observe. It's all so unprecedented.
Ultimately, Bush has indicated that when the bailout is in gear, thereafter the government will put under the microscope the banking system itself, and those insufficient regulations that presently exist.
Until the U.S. government properly reconciles private-sector mortgage banking and public-sector controls (including the insuring or backing-up of funds), the fundamental problem will remain unsolved and may rear its ugly head again when the next real estate boom comes.
dennis
said
scott
said
It's too bad it can't be that simple. Main Street survives and Wall Street feels the consequences of thier actions.
High paid CEOs need to feel some of the pain they have caused the average citizen trying to make a living.
Jason from Saskatoon
said
Paul C
said
Billy
said
J H ansen
said
Mike Kaye
said
TSX & Venure to start their fall rise
said
Gold and silver however will continue to rise because of the inflationary pressures this bailout will cause.
TSX & Venure to start their fall rise
said
Gold and silver however will continue to rise because of the inflationary pressures this bailout will cause.
Jay in Saskatoon
said
Dean
said
Nicole
said
George
said
Bush wanted money for a stupid war that had very little legitimacy. He got billions, which will soon turn into trillions.
Bush wants money for a bailout of people and companies who followed ridiculous policies that put them into debt. He is getting billions, soon to be trillions, more.
Bush doesn't want money to tackle pollution and environmental issues. It would be impossible to find the tens, some to be hundreds of millions they would need to make a sizeable impact in this area.
So far the issues are a bit different, but Harper is heading in the same direction.
Fraser
said
David A.H. Brown
said
$700 billion in taxpayer money would be wasted in a federal bailout – it would be the wrong people paying the bill, the wrong people making the decision, and the wrong reforms to fix the underlying causes.
The industry (not government) should set up a distressed debt fund to provide liquidity to mortgage-backed paper until maturity. A new Financial Services Authority should be established, replacing the SEC and other federal regulators. Other key reforms are needed and outlined here: to election financing, bankruptcy courts, mortgage lending, executive compensation, director certification, accounting practices, and risk-weighted capital.
Commentary on “financial bailout” by governance expert David Brown
Doug BC
said
While I agree that they are going to have to do much more on the regulation side of financial markets,it is far to simplistic to thik it ca be done easily,or that letting these institutions fail would only hurt the wealthy.
And yes,Mr.Bush and his administration should have seen this coming,and acted much sooner.But,the fact is,that the mortage problem got exponentially larger in the Clinton years.It was the Liberal ideology that moved to make homes available to ALL Americans,whether they could afford them or not.It is simply inappropriate to give morgages to people who have no chance to every re-pay them.No matter how noble the concept of a house for every citizen.That idea is what really put this train on the wrong track.
Of course,you won't hear Clinton,or Pelosi,or Obama talk about that.
As harsh as it may be,it MUST be necessary to actually "qualify" fo a loan to make the system work.
MuskyBuck
said
I want to see if politicians in the US have any insight at all on the disparity between rich and poor.
Here's an idea, the 700 billion is given to the ones that took the mortgages out, not to the issuer's.
It's a simple solution. Buy the interest. Let those that took those mortgages out at the freezed interest level, continue to pay down their mortgages over 25 years at that level.
Then the government gets a majority of the 700 billion back.
The citizens of the US keep their homes.
The economy will right itself within a year.
And the banks that go broke, do so because of their decisions.
Enough of the rich getting richer, if this plan calls for anything else, then the US is truly a corrupt, bloated nepatistic organization.
Plabo
said
1-Help his friends
2-Get a pat on the shoulder from his dad because
I wouldn't be surprise if Bush senior was actually running the whole show through his puppet son.
Would also be nice to know how much Bush junior was worth before being elected as president and how much he's worth today.
eddytoronto
said
U.S. banks borrowed $188 billion per day on average in the latest week from the Federal Reserve, meaning that the Fed loaned out more money than the Treasury’s proposed bailout in just one week, still barely managing to keep the economy afloat.
Federal Reserve data showed on Thursday the total amount banks borrowed nearly quadrupled the previous record of $47.97 billion per day notched just the week before, Reuters reports.
$188 billion per day on average over the course of five days means that the total amount borrowed from the Fed in the week ending the 24th September stood at $940 billion - a figure that easily eclipses the proposed $700 billion bailout.
As we have already reported, the $700 billion number was simply pulled out of thin air by the Treasury.
The Treasury’s fact sheet about the bailout states, “The Secretary will have the discretion, in consultation with the Chairman of the Federal Reserve, to purchase other assets, as deemed necessary to effectively stabilize financial markets.”
eddytoronto
said
Paulson’s draft bailout plans says: “The Secretary’s authority to purchase mortgage-related assets under this Act shall be limited to $700,000,000,000 outstanding at any one time.”
As Chris Martenson writes, “This means that $700 billion is NOT the cost of this dangerous legislation, it is only the amount that can be outstanding at any one time. After, say, $100 billion of bad mortgages are disposed of, another $100 billion can be bought. In short, these four little words assure that there is NO LIMIT to the potential size of this bailout. This means that $700 billion is a rolling amount, not a ceiling.”
If the bailout bill passes it is just the beginning of something much larger. $700 billion is a meaningless figure that will do nothing to shore up the economy. It is not a bailout, it is a giveaway that will allow insiders to purge themselves of bad bets and free to continue where they left off. The real reason for the bill is the unprecedented transfer of power to the Executive Branch and into the hands of the global corporate elite.
Leave the trash in the corporate vaults.
said
The government can help ordinary citizens who may be adversely affected by the economic repercussions of financial system turmoil . . . but the bigshots can fend for themselves.
THe corporate boys always have their hands out.
said