Money Bailout Deal Imminent
posted by September 25 at 14:15 PMon
House and Senate negotiators emerged from a closed-door meeting today and said they have reached agreement on basic principles governing a massive financial rescue plan that they hope to pass soon but that is running into stiff resistance from some House Republicans…. Sen. Christopher J. Dodd (D-Conn.), chairman of the Senate Banking Committee, told reporters after the three-hour meeting, “We’ve reached fundamental agreement on a set of principles” to guide the financial rescue plan, and he said Congress could pass a bill within days. He said the principles include protection for taxpayers, effective oversight, help for homeowners facing foreclosure and limits on the compensation of executives whose firms take bailout money….
The agreement also includes a strong oversight board for the bailout program, a ban on golden parachutes and other excessive compensation for executives at participating firms and protections for taxpayers, including a provision that would require participating companies to give taxpayers equity in their firms. In addition, the package would provide relief for community banks that own now worthless stock in mortgage finance giants Fannie Mae and Freddie Mac, which were taken over by the government.
The main point of contention between Democrats and Republicans, Frank said, is a proposal to give bankruptcy judges new power to modify mortgages for homeowners, an idea that is widely viewed as a bargaining chip. Democratic presidential candidate Barack Obama (D-Ill.) has said the measure, which is fiercely opposed by the banking industry, should not be in the bill.
Why Obama would be siding with congressional Republicans, against helping mortgage holders in bankruptcy court attempting to pull themselves above water, is beyond me.
You know my thoughts on what’s missing from this bailout. This plan is costly, and does little to address the fundamental underlying problems that got us to this place.
When I say fundamental underlying problems, I’m not talking about the desperate need to reregulate the financial markets—starting with the provisions of the Glass-Steagall act and nationalizing debt rating agencies.
We need to generate new technologies and industries worth investing in, or we’ll be right back to this dark place.
This bailout might delay things for a few months, or a few years. But, the problem remains and will remain even if this plan is enacted.