US okays $700b bailout

US okays $700b bailout

Washington, Sept. 28: US Congressional leaders and the Bush administration reached a tentative agreement on early Sunday on what may become the largest financial bailout in American history, authorising the Treasury to purchase $700 billion in troubled debt from ailing firms in an extraordinary intervention to prevent widespread economic collapse. Officials said that Congressional staff members would work through the night to finalise the language of the agreement and draft a bill, and that the bill would be brought to the House floor for a vote on Monday. The bill includes pay limits for some executives whose firms seek help, aides said. And it requires the government to use its new role as owner of distressed mortgage-backed securities to make more aggressive efforts to prevent home foreclosures. In some cases, the government would receive an equity stake in companies that seek aid, allowing taxpayers to profit should the rescue plan work and the private firms flourish in the months and years ahead. The White House also agreed to strict oversight of the programme by a Congressional panel and conflict-of-interest rules for firms hired by the Treasury to help run the programme. The administration had initially requested virtually unfettered authority to operate the bailout programme. But as they moved toward clinching a deal, both sides appeared to have given up a number of contentious proposals, including a change in the bankruptcy laws sought by some Democrats to give judges the authority to modify the terms of first mortgages. Congressional leaders and treasury secretary, Mr Henry M. Paulson Jr., emerged from behind closed doors to announce the tentative agreement at 12.30 am on Sunday, after two days of marathon meetings. "We have made great progress toward a deal, which will work and be effective in the marketplace," Mr Paulson said at a news conference in Statuary Hall in the Capitol. In the final hours of negotiations, US Democratic la-wmakers, including Representative Rahm Emanuel of Illinois and Senator Kent Conrad of North Dakota, carried pages of the bill by hand, back and forth, from Speaker Nancy Pelosi's office, where the Democrats were encamped, to Mr Paulson and other Republicans in the offices of Representative John A. Boehner of Ohio, the House minority leader. At the same time, a series of phone calls was taking place, including conversations between Ms Pelosi and President George W. Bush; between the treasury secretary, Mr Paulson, and the two presidential candidates, Senator John McCain and Senator Barack Obama; and between the candidates and top lawmakers. Source: deccan.com