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Bailout Angst

Congressional leaders thought they had reached an agreement Thursday on the $700 billion bailout. McCain and Obama dropped their debate preparation long enough to attend a meeting Thursday to put in their two cents. McCain even promised to put off Friday’s debate, if necessary.

Then the wheels came off. Did McCain and Obama get in the way? They aren’t even on the committees that are putting the plan together. Did House Republicans throw a wrench in the works with their insurance-instead-of-bailout plan? They claimed that the so-called agreement congressional leaders thought they had was never the case.

So the Senate and House committees went back to work Friday. Obama had already said that Friday’s debate should go on regardless of the bailout crisis, and McCain finally decided he could attend the debate despite no agreement. By midday Saturday, Congress had made significant progress on a bailout agreement. They want to announce a deal by Sunday evening, before Asian stock markets open. The market could be in for a wild ride this week.

Posted 9/27/08 1:27pm ET in Economy | Permalink | Comments (0)

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 | Permalink | Comments (0)