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Loading ...$700b economic bailout advances
09.29.2008 8:52am EDT
(Washington) With the House slated to vote today on a deeply unpopular $700 billion rescue plan for beleaguered financial companies, President Bush and congressional leaders were scrambling to corral support.
Bush called the election-year vote a difficult one for lawmakers but said he is confident Congress will pass a measure his top economic officials have argued is vital to averting a broader economic meltdown.“Without this rescue plan, the costs to the American economy could be disastrous,” Bush said in a written statement Sunday.
Convincing their colleagues to back the plan despite thousands of angry phone calls, e-mails and letters pouring in from angry constituents proved a tall order for leaders in both parties.
“Now we have to get the votes,” said Sen. Harry Reid, D-Nev., the majority leader. He said the measure could pass the Senate as early as Wednesday.
“Nobody wants to have to support this bill,” said Rep. John A. Boehner, R-Ohio, the House minority leader. But he said he was urging “every member whose conscience will allow them to support this” to do so. Officials in both parties expected the vote to be a nail-biter.
The two major party presidential candidates – Republican John McCain and Democrat Barack Obama – expressed tepid support for the bailout.
The Bush administration gets broad power to use taxpayer money to rescue cash-strapped financial firms in the legislation, which is designed to unfreeze choked credit and avert a broader economic meltdown.
Congress won a hand in the program too, after 10 days of high-intensity haggling among lawmakers in both parties and Treasury Secretary Henry Paulson, who sought the unprecedented amount of money with little supervision.
Instead, the bill lets Congress block half the money and force the president to jump through some hoops before using it all. The government could get at $250 billion immediately, $100 billion more if the president certified it was necessary, and the last $350 billion with a separate certification – and subject to a congressional resolution of disapproval.
Still, the resolution could be vetoed by the president, meaning it would take extra-large congressional majorities to stop it.
Lawmakers demanded curbs on the pay packages of top executives whose firms get the help, and assurances that taxpayers would ultimately be reimbursed by the companies for any losses. But the government would have broad discretion to decide how to implement both, something Paulson insisted was vital to make the rescue effective.
The legislation also requires that the government take ownership stakes in companies that receive federal infusions, so it could share a piece of potential future profits.
Banks, credit unions, securities brokers and dealers, and insurance companies, among others, could get the help as long as they had “significant operations” in the United States. Originally designed to help companies get rotten mortgage-related investments off their balance sheets, the legislation allows the government to buy up any kind of asset top economic officials think is necessary to promote market stability.
The final 110-page bill was released Sunday evening after a final weekend of intense negotiating, and Republicans and Democrats huddled for hours in private meetings Sunday night to learn its details and voice their concerns. Many said they left uncertain of how they would vote.
Rep. Joe Barton, R-Texas, an opponent, estimated that half of the House’s 199 Republicans are “truly undecided.”
Democratic Rep. Elijah Cummings, D-Md., said he was inclined to oppose the bill. But he added: “A lot of people are going to hold their nose and vote for it, because they’ve been put in a bad position and they don’t have any other option.”
Leaders in both parties were scrambling to put the most positive face on the deeply unpopular plan. House Speaker Nancy Pelosi, D-Calif. said it wasn’t a bailout but a “buy-in” for taxpayers to rescue the economy.
Still, lawmakers in both parties who are facing re-election were nervous about embracing such a costly plan proposed by a deeply unpopular president that would benefit perhaps the most publicly detested of all: companies that got rich off bad bets.
Quasi: Your naive (and incorrect) characterization of the stock market is really painful to read.
Most make money at it, simply because the value of the goods in the market, in general, goes up over time. There are drops, but the trendline over a long period of time is upward-sloping.
We can ascertain this simply by the fact that the value of the market can either be constant or increasing, but cannot be decreasing because the value cannot fall below zero. Even if it falls 40% of the time, it rises 60% of the time, which is how people make money by investing.
What differs from investor to investor is how much money they make, and that’s pretty much a matter of luck. But that doesn’t negate the fact that, on average, any person’s earnings from the stock market will be positive.
I expect that both Wall Street and Main Street need to start living on their income and not on credit. It would be better for all involved.
I am glad to have finally no credit cards at all. Now I have all I need, and even more, than when I was paying so much interest to the big self-serving banks.
Unfortunately, the baby boom will soon become old and disabled, and they will not have enough to continue to support their “lush lifestyle” to which they have become accustomed.
In the 1980’s they went after bicycles and exercise gear, and when the market was saturated, many of the companies that made and sold those things eventually went bankrupt.
In the 1990’s, it was about BIG houses, SUV’s (OIL, that is), computers and electronics.
Now it is about luxury cruises and luxury homes. BTW, old people cannot live in big multi-story house. They are too frail to maintain them and climb up stairs.
Over the next 20 years or so, they will stress the medical and health systems, and they will fail too. And this effect is supplemented by illegal aliens in the US.
The greedy (which equals unethical Republicans, BTW) business people will never see it any other way. They want it all, and they will find a way to cheat the poor and middle classes out of their health and lives.
You see, stocks and bonds are a way to get the poor and middle classes to invest their meager wages and savings in a business. At some pioint, the 51% owners, CEO’s and executives will take all they can from the cash flow, then leave the place when they have destroyed the business. They will get a big golden parachute, and the little “hopeful” stockholder will get nothing.
Stocks are like going to “Las Vegas”, which is often painfully and truthfully called “Lost Wages”. Only a very few win, and most loose.
Eventually, the funeral homes will be stressed and when all the baby boom has died, many of them will “go unde” when their audience has past on. (Pun intended!)
As for me, I intend to go out in flames, and as much as possible, cheat the “death” houses from all their opportunistic and cheating way when they prey on the emotionally distressed living. Viva my revenge!
Meh. Hopefully it will pass, as much as I wish this wasn’t necessary.