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Obama: McCain 'Katrina-Like' on Economy

Presidential contenders Barack Obama and John McCain gingerly are embracing the bailout deal, with McCain calling it... more

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2 months ago

Draft of Rescue Plan Makes It Into Writing

An end to the debates in Washington over the proposed bailout of financial institutions on Wall Street is in sight. Leaders in Congress gave an update on the status of the $700 billion economic-rescue package early Sunday evening.

“The era of Wall Street recklessness is over,” Speaker of the House Nancy Pelosi (D-Calif.) said of the bill, which promises more regulation as well as future limits to be imposed upon executive compensation.

Pelosi, along with Senate Majority Leader Harry Reid (D-Nev.), Rep. Barney Frank (D-Mass.), and Sen. Christopher Dodd (D-Conn.) each spoke in support of the bill that will be presented to the House for a vote sometime Monday.

Now, even some of the more reluctant House Republicans are supporting the rescue plan.

Rep. Adam Putnam (R-Fla.), Rep. Roy Blunt (R-Mo.), House Republican Whip, Rep. Eric Cantor (R-Va.) and House Minority Leader John Boehner (R-Ohio) gave their support of the revised plan in a press conference Sunday evening.

“When we stood up and blocked the ‘so-called’ deal last week we did so because we thought taxpayers weren’t being protected,” said House Minority Leader John Boehner (R-Ohio) Sunday evening. “It’s a bill that does entail risk; taxpayer risk. But I think what you see is we’ve reduced the amount of taxpayer risk in this bill considerably.”

If passed by the House, the bill will then move to the Senate, which will likely consider it Wednesday, after the Jewish holiday of Rosh Hashanah ends.

President Bush lent his support to the revised bill in a press release following the press conference, stating, “I appreciate the leadership shown by Members on both sides of the aisle, who came together to write a very good bill. This bill provides the necessary tools and funding to help protect our economy against a system-wide breakdown.”

Treasury Secretary Henry Paulson released a similar statement of support, stating that the bill “provides the necessary tools to deploy up to $700 billion to address the urgent needs in our financial system.”

The bill, which is more than 100 pages long and is called the “Emergency Economic Stabilization Act of 2008,” is meant to resuscitate the U.S. financial system, parts of which have virtually shut down in recent weeks.

An end to the debates in Washington over the proposed bailout of financial institutions on Wall Street is in sight. Leaders in... more

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2 months ago

Public support softens as Pelosi Pushes Franks historic bailout Package

WASHINGTON - In the short run, congressional leaders have achieved their goal of producing an agreement Sunday on a federal bailout of banks and other financial institutions holding bad mortgage debts before the world's stock markets reopened.

But in the long run, the scope and still-unknown effects of the greatest government intervention in the financial markets since the Great Depression and the remaining underlying instability of the nation's economy -- will impose a new political challenge for the next president and Congress elected in November. The situation already has reshaped the election campaign debate.

Congressional leaders face another immediate and uncertain challenge this week with the House expected to vote on the plan as soon as Monday, and the Senate as soon as Wednesday in corralling enough votes to both pass it and present the controversial two-stage bailout as a bipartisan response to a national crisis.

While resistant House Republican leaders have agreed to it, many rank and file members still are balking at the unprecedented bailout of the nation's financial institutions, piling as much as $700 billion of new federal debt on the nation's taxpayers.
Congressional leaders are attempting to frame the measure as their own best compromise on a plan that the Bush administration proposed which they are now calling unacceptable.

This means, in part, dividing the bailout into two phases, starting with $350 billion but requiring congressional approval for a second pay-out. And it includes a demand that if the government does not recoup all the money that it invests in reselling mortgage debt that it purchases, it comes up with a plan to get the financial industry to cover any projected taxpayer losses.

"This is the administration's problem,'' House Speaker Nancy Pelosi (D-Calif.) said Sunday, "they sent us their bill, we did our best to improve it, and now we'll see how much support we can get We will have to have bipartisanship to pass it.''

President Bush, who proposed the Treasury Department rescue and has pushed for it with national television and radio addresses, calls it essential to averting "financial panic' in frozen lending and a "long and painful recession. Congressional leaders agree that it is essential in averting a freeze in credit for everything from home loans and car loans to student loans and credit cards.

"Getting this done soon, promptly, is absolutely critical to the confidence of the markets,'' Sen. Judd Gregg (R-N.H.), one of the lead negotiators, said Sunday, predicting the votes to approve it this week. "The option of not passing it is not acceptable.''
WASHINGTON - In the short run, congressional leaders have achieved their goal of producing an agreement Sunday on a federal... more

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2 months ago

GLOBAL MARKETS-US dollar up, stock futures steady, bonds lower

The U.S. dollar rose against the yen and the euro, and US Treasury bond futures slipped on Sunday evening as U.S. lawmakers geared up for a Monday vote on creating a $700 billion government fund to buy bad debt.
U.S. stock futures edged higher, but momentum was held in check as another big U.S. bank appeared in the throes of an emergency takeover and two struggling European banks looked set for nationalization.
And while Washington's bailout package is seen as crucial in tackling the worst global financial crisis since the Great Depression, doubts remain as to whether it could immediately thaw the money and credit markets.
"What you hope for is a positive reaction in Asia and Europe overnight and stability in the U.S. financial markets, most particularly the credit markets this week," said Jim Awad, Chairman at W.P. Stewart & Co. Ltd in New York.
"I would view any (stock market) rallies as being transitory because now the real work begins," he added.
Belgian-Dutch financial group Fortis faced nationalisation on Sunday after European Central Bank President Jean-Claude Trichet held emergency talks with Belgian and Dutch ministers on rescuing one of Europe's 20 banks.
Britain's government, meanwhile, will nationalize troubled mortgage lender Bradford & Bingley and were discussing a sale of its savings book and branches, people familiar with the matter said.
In Germany, Hypo Real Estate was in urgent talks with German banking regulator Bafin and the finance ministry about solving a refinancing squeeze at the bank, sources with knowledge of the matter said.
The New York Times reported that Citigroup and Wells Fargo were locked in a bidding war over a possible emergency takeover of Wachovia Corp. The U.S. government, led by the Federal Reserve and the Treasury Department, are also involved in the Wachovia talks, the paper said.
S&P 500 stock index futures rose 2.4 points and were above fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average index futures rose 10 points and Nasdaq 100 index futures were up 3.25 points.
New Zealand's stock market rose 1.1 percent in early trade.
Shortly after 6:30 p.m. New York time (2230 GMT) on Sunday evening, the 10-year Treasury note future opened down about 3/32 in price at 114 and 13/32, as the safe haven bid for government debt faded slightly.
The euro slipped 0.6 percent to $1.4530. Against the yen, the dollar was last up 0.3 percent at 106.26 yen.
Spot gold prices slipped 0.6 percent to $878 an ounce.
Wall Street equities had scratched out a gain Friday as financial stocks rallied late in the session on hope the U.S. Congress could reach agreement on the rescue plan. Still, Friday also featured much the same move to safe-haven assets that have dominated global markets for the past two weeks.
Gold jumped 4.0 percent at one point on Friday and the yen climbed broadly as investors piled into safer assets after news the bailout talks had stalled, while the failure of Washington Mutual, the biggest bank closure in U.S. history on Thursday, eroded confidence.
Oil prices slipped on Sunday night, pressured by concerns the financial market crisis would slow demand. Further pressure came as investors, who flocked into oil and other commodities earlier this year as a hedge against inflation and a weak dollar, shift into safer havens. U.S. crude oil futures settled at $106.89 a barrel on Friday, down $1.13.
Asian stocks ended last week lower. Japan's Nikkei share average shed 0.2 percent for the week, and the MSCI index of Asia-Pacific stocks outside Japan fell 1.5 percent.
MSCI's main world equity index fell 2.8 percent last week week. Central banks injected fresh liquidity into the global banking system, helping lower soaring inter-bank borrowing rates, but money markets remained mostly paralyzed.
The U.S. dollar rose against the yen and the euro, and US Treasury bond futures slipped on Sunday evening as U.S. lawmakers geared... more