Thread: Breakthough On Bailout

'Breakthrough' reported on bailout deal

Negotiators say details of tentative agreement remain to be worked out

MSNBC News Services
updated 9:53 p.m. PT, Sat., Sept. 27, 2008

WASHINGTON - Key lawmakers in both parties and Treasury Secretary Henry Paulson made a "breakthrough" on a tentative deal for the multibillion-dollar government bailout of distressed financial companies, they said early Sunday.

In a dramatic press conference at the Capitol after midnight, Senate Majority leader Harry Reid, D-Nev., said there had been a "breakthrough" in the negotiations, and Paulson said that "I think we're there," although details remained to be worked out overnight. Reid said there would be an announcement later Sunday.

"We've made great progress," House Speaker Nancy Pelosi told reporters after a night of marathon talks. "We have to get it committed to paper so we can formally agree."

A key sticking point has been how to include a new government-sponsored program demanded by House Republicans as an alternative to devoting the entire $700 billion proposed by Bush on buying up devalued mortgage-backed securities and other toxic debt from banks and investors.

The negotiators had been nervously eyeing the reopening of the Asian markets on Sunday. The aim of the plan is to prevent credit from drying up and causing a meltdown of the U.S. economy — with dire consequences globally.

The House was scheduled to convene at 1 p.m. EDT Sunday and members there were hoping they could vote on it by that evening and go home to campaign for re-election. The Senate isn't scheduled to go back into session until Monday morning.

Candidates get into the act
Presidential politics again played a role in the bargaining. Republican John McCain and Democrat Barack Obama called key negotiators and portrayed themselves as helping without getting directly involved in the talks.

Bush expressed confidence earlier Saturday that lawmakers soon would approve a rescue plan while acknowledging that many Americans are frustrated and angry at the amount of money taxpayers are being asked to put up for covering Wall Street firms' mistakes.

The president spoke with Paulson, McCain and other Republican lawmakers during the day, said White House spokesman Tony Fratto.

Under the plan being considered, the Treasury Department would buy deeply distressed mortgage-backed securities. The money should help troubled lenders make new loans. The government would later try to sell the discounted loan packages at the best possible price.


GOP: Less taxpayer spending
House Republicans were insisting that some of the money be available to insure, rather than buy, distressed mortgage-backed securities. Banks and investment firms holding such packages would pay the government for insurance against losses if the mortgages default.

Proponents say their idea would require less taxpayer spending. But the Treasury Department has said it would not pump enough money into the financial sector to make credit sufficiently available.

Another proposal would have the government receive stock warrants in return for the bailout relief, ensuring that proceeds from eventual sales of the discounted packages would return to the Treasury.

Negotiators were trying to settle on a means of limiting severance packages for executives of companies that benefit from the rescue plan.

They also discussed phasing in the program's costs. For example, after the first $350 billion or so is made available, Congress could try to block later amounts if it believed the program was not working. The president presumably could veto such a move, however, requiring extra large margins in the House and Senate to override.

House Democrats backed a fee that would cover some bailout costs. Pelosi, speaking to reporters after a meeting with fellow Democrats, said a transaction fee could be assessed if the non-partisan Congressional Budget Office determined taxpayers had lost money in the bailout.

"If after five years ... the CBO decides that the American taxpayer has lost money in this, then there would be a fee on financial institutions," Pelosi said, adding that she hoped the provision could be part of a final bailout deal.

Pelosi said Paulson could determine how to assess the fee.

House Democrats' plan
CNBC reported that a draft proposal it obtained from the House Democratic leadership calls for large changes from the original Bush-Paulson plan:

Cutting in half the $700 billion request; requiring congressional approval for future payments.
Protection for taxpayers, including reimbursement through ownership shares and asset recovery.
Limits on executive compensation: Bans on multimillion-dollar golden parachutes, recovery of bonuses paid based on promised gains, shareholder votes on executive compensation for companies participating in the rescue.
Allowing government to purchase troubled assets from pension plans, local governments, and small banks that serve low- and middle-income families.
Transparency requirements; for instance, transactions would be posted online.
Loosen credit to small businesses by allowing small community banks to deduct losses from investments in Fannie Mae and Freddie Mac stocks.
CNBC also reported that Democrats apparently agreed to drop a push for a bankruptcy-aid provision, intended to help homeowners facing foreclosure by allowing judges to modify terms of mortgages.

"We should not be bailing out Wall Street on the backs of American taxpayers," House Minority Leader John Boehner, R-Ohio, told reporters at midafternoon, when Paulson and key House and Senate members took over the negotiations from their aides.

Reid, D-Nev., said earlier that the goal was to come up with a final agreement before the Asian markets open Sunday night. "Everybody is waiting for this thing to tip a little bit too far," he said, so "we may not have another day."

Whatever emerges "is not the proposal that we got from Secretary Paulson," Reid said. But lawmakers said it would be much closer to Paulson's original plan than to the alternative offered by House Republicans several days ago.

McCain, who flew to Washington after Friday night's presidential debate in Mississippi, spent part of Saturday working the phones and "helping out as he can," aide Mark Salter said. But McCain did not enter the Capitol, where his colleagues were voting on a $634 billion spending bill that ended a ban on drilling off the Atlantic and Pacific coasts, and sent billions of dollars to the military.

McCain supports such measures. But the vote would have been difficult for him because the bill also included more than 2,000 pet spending projects worth more than $6 billion. That is the kind of pork-barrel spending that McCain has pledged to end.

Obama campaigned in North Carolina and Virginia. Aides said he placed calls to Paulson, Reid and a key House member to keep tabs on the finance negotiations.

Both presidential candidates are trying to position themselves to take at least partial credit if an accord is reached. Obama spokesman Tommy Vietor offered new details from Thursday's contentious White House meeting that underscored the divisions among lawmakers trying to reach an agreement.

He said Obama encouraged Paulson to work with House Republicans. Since then, Vietor said, Obama has urged negotiators to find a compromise with enough options so the treasury secretary has the flexibility "to act in an effective manner to stem this crisis."

The Associated Press, NBC News' Mike Viqueira, Reuters and CNBC contributed to this report.


© 2008 MSNBC Interactive

http://www.msnbc.msn.com/id/26884523

That's not good enough. NO BAILOUT!!!

I had the radio on when they announced it...Listening to Harry Reid and Nancy Pelosi talking about it makes me puke!

How many times have they announced a deal on a bailout and it has not been true? Is this the second or third time a deal has been announced?

W

The Democrats don't care what Americans want or don't want they just want to go back on vacation.

I hope the Republicans let the Democrats take this and have at it then hopefully the Democrats will tank!

Originally Posted by ALIPAC

How many times have they announced a deal on a bailout and it has not been true? Is this the second or third time a deal has been announced?

W

That's just what I was thinking.

I heard this morning that Paulson still gets his $700 Billion and Bush has the option to toss another billion at his descretion after Paulson is initially paid half of the $700 B. We have been calling, emailing and faxing, and it appears our lawmakers are deaf. They are just not listening to the people.

CALL, FAX and EMAIL!! WE CANNOT GIVE UP AND WE CANNOT GIVE IN!!!


TOGETHER WE CAN DO THIS!!!

U.S. SENATE AND HOUSE CONTACT INFORMATION:

http://www.alipac.us/ftopict-63874.html

TOLL FREE

Congressional Switchboard Numbers

800-833-6354
866-340-9281
877-762-8762
866-808-0065
888-355-3588
866-220-0044
_________________

We need a Third Party ..... and we need one NOW.

I sent an email to Lou Dobbs last night regarding the fact that this is a Golden Opportunity for the formation of a THIRD PARTY. We need to contact the Republican House Representatives who are against this bailout, urge them to caucus, form an independent party, repudiate their affiliation with the Democratics and Republicans.

We would have an Independent party therefore already seated, perhaps naming it as the CONSTITUTIONAL PARTY would be appropriate! Nancy Pelosi would lose her leadership as speaker of the house, and there would be numerous other immediate benefits. Do it now while the iron is hot!

Also, I saw Matt Kibbe from Freedom Works on C-span this morning. He has a website set up for a petition against the bailout. Below is the link to this petition, if you're interested. There are comments allowed by the signatures.

http://nowallstreetbailout.com/


~ANQ

This is disgusting. The politicians don't care what the taxpayers want. They don't care about the will of the people. 96 percent of the country is against this, but they are going to give the crooks what they want, the hell with us. I can't believe the arrogance of both parties on this. Not one CEO is going to get arrested for this including the crooks at Fannie Mae and Freddie Mac. The CEO's are still going to make hundreds of millions of dollars while the rest of this country goes straight to hell.

It will only get worse until we kick the crooks out of office.