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Fundranker Blog—Wallstreet Bailout

Wallstreet Bailout

The Bush administration, the Treasury Department (Henry Paulson), and the Federal Reserve (Paul Bernanke) have been working nonstop since late last week with Congressional leaders to come up with a plan to bailout the U.S. financial industry. So far they have come up with a $700 billion price tag and just a few details. Democrats are asking for additions to the administration plan to build in strong oversight, to require the government to adopt a systematic approach for preventing foreclosure on mortgages it acquires in the bailout as well as loans held by Fannie Mae and Freddie Mac, to allow judges to rewrite mortgages to lower bankrupt homeowners’ monthly payments, to limit executive pay packages of companies which sell their bad assets to the government, and to require that the government get shares in those companies.

The market responded to rumors of the plan as well as new limits on short selling of financial companies on Thursday and Friday with sizeable rallies. Today, however, after digesting a few more details on the bailout plan as well as news that the government approved requests from Goldman Sachs and Morgan Stanley to change their status to bank holding companies, the market gave back nearly half of those gains. Congressional action on the bailout plan could come as early as Wednesday.

Posted 9/22/08 5:56pm ET in Economy