USA Today: Bailout Specifics

Updated 1h 31m ago

From staff and wire reports

WASHINGTON — The Senate's top Democrat says there's been significant progress on a $700 billion bailout to rescue Wall Street and he hopes to announce a deal by the end of the weekend.

"We hope sometime tomorrow evening we can announce that there has been some sort of agreement in principle so that the only thing that will have to be done is to write the legislation," said Sen. Harry Reid, D-Nev. "It is still a long way from completing it but we've made significant progress."

Aides worked late into the night, he said, and there are "probably 15 issues still left outstanding that senators are going to have to get together and resolve."

The bailout is intended to rescue bankers from the bad loans that threaten to derail the economy and plunge the country into a depression. With talks set to resume, negotiators are trying to reach a deal before Asian markets open Monday.

President Bush expressed confidence that lawmakers soon would pass a rescue plan before leaving Capitol Hill to campaign for re-election. He acknowledged that many Americans are frustrated by a situation that has led to a possible $700 billion bailout and angered that they may have to cover Wall Street firms' mistakes.

Bush used his weekly radio address to appeal to lawmakers from both parties to work together on "an issue that transcends partisanship." He said he was confident "we will pass a bill to protect the financial security of every American very soon."
The president said he is aware many of his radio listeners are upset. "You make sacrifices every day to meet your mortgage payments and keep up with your bills. When the government asks you to pay for mistakes on Wall Street, it does not seem fair," Bush said.

"And if it were possible to let every irresponsible firm on Wall Street fail without affecting you and your family, I would do it. But that is not possible," he said.

In a sign of movement Friday, House Republicans sent their No. 2 leader, Rep. Roy Blunt of Missouri, to join the talks after their objections to an emerging compromise brought negotiations to a standstill.

Massachusetts Rep. Barney Frank, a key Democrat in eight days of up-and-down talks designed to stave off an economic disaster, said he was convinced that by Sunday there would be an agreement "that people can understand on this bill,"

House Speaker Nancy Pelosi told fellow Democrats during a private meeting Friday that the legislation would not let judges rewrite mortgages to help bankrupt homeowners avoid foreclosure. That provision amounted to a deal-breaker for Republicans, whose votes are needed to pass the measure, she said, according to lawmakers at the meeting.

Democrats and Bush administration officials said they were willing to include House Republicans' idea of having the government insure distressed mortgages — but only as an option, rather than a replacement for the administration's more sweeping approach.

At an early morning tree planting event at the White House on Saturday, Bush ignored a reporter's question about when a bailout deal could be reached. On Friday night, he called some lawmakers and discussed the rescue plan with some others at a National Book Festival gala he attended at the Library of Congress. The White House declined to disclose their names, saying the president was trying to have constructive discussions without publicly pressuring them.

The legislation the White House is promoting would allow the government to buy bad mortgages and other sour assets held by investors, most of them financial companies. That should make those companies more inclined to lend and lift a major weight off the national economy that is already sputtering.

Many House conservatives say they are against such heavy federal intervention. Under the House GOP plan, the government would insure the distressed securities rather than buy them. Tax breaks would provide additional incentives to invest.

House Minority Leader John Boehner on Friday released a letter to House Speaker Nancy Pelosi demanding that "serious consideration" be given to the radically different proposal. "If such consideration is not given, a large majority of Republicans cannot — and will not — support" the administration's plan, Boehner wrote.

But the opposite also was true: Many Democrats were clearly opposed to the House Republican proposal.

"We don't have to rush in with the greatest advance of socialism in the Western world," said Rep. Louis Gohmert, R-Texas and a backer of the House Republican proposal. "The only thing we have to fear is fear-mongering from the secretary of the Treasury."

In a brief appearance before reporters, Boehner provided few specifics about the proposal. "We will not agree to a bill that sells taxpayers out to bail out Wall Street," he said.

Rep. Eric Cantor of Virginia, who's led some of the House GOP's efforts to come up with a plan, said he was still pushing for some type of private insurance that could cover some of the mortgage-backed bonds instead of having the government buy them.

Cantor and Boehner denied claims by Pelosi and other Democrats that House Republicans sprung their ideas on an unsuspecting White House and Democrats Thursday and derailed negotiations.

"There was nothing put on the table that Speaker Pelosi didn't know about," Boehner said.

Contributing: USA TODAY's Ken Dilanian and Fredreka Schouten in Washington; Randy Lilleston in McLean, Va.; Associated Press

KEY ELEMENTS

A bipartisan group of lawmakers said Thursday they agreed to the outlines of a $700 billion bailout for the financial industry that makes several substantial changes to President Bush's request. Key Republicans were still resisting the emerging agreement.

Here are its main elements:

Authorize $700 billion for the government to purchase
troubled assets and buy equity in distressed financial firms.

Require the Treasury Department to make rules to prevent excessive compensation for executives whose companies benefit from the rescue.

Establish a strong oversight board with authority to halt the program, a special investigator general to monitor it, and egular government audits.

Require the government to renegotiate mortgages it acquires under the program with the aim of helping borrowers keep
their homes.

Phase in the money for buying troubled assets, with $250 billion
available immediately, $100 billion to be released if the Treasury secretary certifies it is needed, and the last $350 billion available with another certification, but subject to a congressional vote to block it.

Share this story: