It is being reported that a deal has been reached on the Wall Street bailout, this after a week of frenzied negotiations, and it looks like concessions were made to both Democratic and Republican critics. The bailout plan is designed to end a vicious downward spiral that has battered all levels of the US economy. Hundreds of billions of dollars in investments based on mortgages have soured and stopped many banks' willingness to lend.
As the largest government intervention in financial markets since the Great Depression, it casts Washington's long shadow over Wall Street not seen in a while. To some extent, key Democratic demands on Congressional oversight and consumer protection have all been met. This the biggest U.S. bailout in our country's history has the tentative support of both Barak Obama and John McCain.
The plan would give the administration broad power to use billions upon billions of taxpayer dollars to purchase devalued mortgage-related assets held by cash-starved financial firms. The Democratic leadership was able to ensure that Congress has a stronger hand in controlling the money than the White House had wanted. Still the basics of the plan still includes the idea that the Federal government will take over huge amounts of devalued assets from beleaguered financial companies in hopes of unlocking frozen credit.
Currently Republicans and Democrats are huddled in private meetings to learn the details of the 110-page bill, and voice their concerns. Democrats did have to surrender their cherished goals of letting judges rewrite bankrupt homeowners' mortgages and steering any profits gained toward an affordable housing fund. However the plan will help struggling homeowners by requirering the government to renegotiating bad mortgages it acquires with the aim of lowering borrowers' monthly payments so they can keep their homes.
The Democrats were able to get some of their biggest demands, such as Executive Compensation, where the rescue would only be open to companies who deny their executives "golden parachutes" and limit their pay packages. Also firms that got the most help through the program - $300 million or more - would face steep taxes on any compensation for their top people over $500,000. The plan also states that the government would receive stock warrants in return for the bailout relief, giving taxpayers a chance to share in recipients' future profits.
The House will Vote tomorrow, Monday morning, and the Senate will Vote Wednesday.
Read The Full Bailout Plan Here
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