Senate plans bailout vote on Wednesday
By Joseph Williams, Globe Staff
WASHINGTON -- US Senate leaders announced tonight that their chamber plans to vote on a Wall Street bailout package Wednesday evening.
It is expected to include the sweetener of raising the insurance limit on individual bank deposits from $100,000 to $250,000 to help small business owners and avert runs on banks by fearful customers. Earlier today, both John McCain and Barack Obama endorsed increasing the deposit guarantee after talking separately to the president from the campaign trail.
Obama's campaign announced tonight that he will return to Washington for the vote, and McCain's campaign did as well.
Several influential lawmakers -- including House Speaker Nancy Pelosi, a Democrat, and Representative John Boehner, the top Republican -- signalled their approval of the deposit insurance proposal as well, and the Federal Deposit Insurance Corp. said today it will seek permission to temporarily raise the limit. Aides to House Republicans said the FDIC proposal might draw some conservative Republicans who voted against the package on Monday.
Congressional leaders, alarmed by record losses in US financial markets and instability worldwide, worked publicly and behind the scenes today to resurrect President Bush's $700 billion bailout plan, pledging to set aside political differences and send a bill to the president's desk before the end of the week.
The salvage operation seemed especially difficult since an unusual alliance of conservative Republican and liberal Democrats helped defeat the bill in the House on Monday. But the ensuing plunge on Wall Street injected a new sense of urgency to solve the biggest financial crisis in generations.
Some lawmakers floated another proposal to persuade House opponents to reconsider -- a change to complex accounting rules that now require financial institutions to adjust the value of their assets to reflect current market prices, even if they plan to hold the assets for years. Some House Republicans say those rules undermined banks, forcing them to report huge paper losses on mortgage-backed securities and unnecessarily weakening confidence in them. (Federal regulators issued some bank-friendly clarifications to those rules today.)
McCain applauded that move. "John McCain is pleased to see that the SEC has finally decided to permit alternative accounting methods to mark-to-market accounting for securities where no active market exists. There is serious concern that these accounting rules are worsening the credit crunch, making it difficult for small businesses to stay afloat and squeezing family budgets. In March, John McCain called for a meeting of accounting professionals to discuss whether mark-to-market accounting was magnifying problems in the financial markets," his campaign said in a statement.
The flurry of activity on Capitol Hill spurred the Dow Jones industrial average to a nearly 500-point surge today, a rally that partly offset Monday's 778-point drop -- the biggest one-day loss in years. Analysts said while bargain hunters were scooping up stocks, the rise reflected investors' confidence that Congress will come to the rescue.
The sellout continues raising the depositor insured limit on saving accounts does nothing for the tax payers who will foot wall streets bill.The senate is now going into the arm twisting business. Senators and congressmen who are indebted to wall street because of large donations from the banks which caused this crisis are obliged to offer support including the two presidential candidates. Passage of this puny offer to depositors is an insult that should raise a further cry of outrage. Dear congress persons and senators use some of the money for job creation. Novel idea! Earn your salary and perks.
Being one who is proud to be an American, I am profoundly embarrassed with my govenrment, especially with the appararant total disregard it has with the entire world at the moment!
The election for a new President is a perfect example. The Candidates and their respective Partys seem to be totally unaware of the current crises! I am so totally sick of the back and forth CRAP! Neither Candidate seems to not only have a clue of not only what is going on, but also how to solve it. If asked a question, they DO NOT answer it!
Neither Party seems to even have an interest in solving the current major issues in the world, including how to handle Terrorism as well as the World Economical Crisis. As one who loves living in the US, I am totally disallusioned with what is going on!
Being one who is proud to be an American, I am profoundly embarrassed with my govenrment, especially with the appararant total disregard it has with the entire world at the moment!
The election for a new President is a perfect example. The Candidates and their respective Partys seem to be totally unaware of the current crises! I am so totally sick of the back and forth CRAP! Neither Candidate seems to not only have a clue of not only what is going on, but also how to solve it. If asked a question, they DO NOT answer it!
Neither Party seems to even have an interest in solving the current major issues in the world, including how to handle Terrorism as well as the World Economical Crisis. As one who loves living in the US, I am totally disallusioned with what is going on!
Nobody is in favor of paralysis of credit. As others have said, what we are against is a cure that is worse than the disease. Bankrupting the US treasury is a very dangerous thing. There are some pockets of wealth remaining in the US economy but they aren't the pockets of working families and they aren't in the US treasury.
It was rather obvious to many of us that Paulson's original proposal was a naked, opportunistic grab for wealth and power based upon what may be a real crisis but a crisis that was deliberately mischaracterized to justify Paulson's solution. You know, sort of like the Iraq invasion.
Congress and the administration can easily put the American people over a barrel in situations like these. If they offer only one solution, do we have to take it? No!
The bill that was voted down yesterday had many more pages than Paulson's proposal but still was the embodiment of his approach to the problem. There was nothing in the way of a creative alternative solution; it was mostly a lot of verbiage, a lot of it non-binding, added to the original. It still was fundamentally bad.
There were alternatives to this bill, even alternatives suggested by members of Congress. They were simply ignored.
Stop the foreclosures, restructure the mortgages, give discretion to bankruptcy judges, and guarantee loans made to non-financial businesses and individuals. Provide credit relief to non-investment banks. Punish (or let the market punish) money managers who knowingly (or through professional malpractice) made questionable investments – don’t let them simply continue. Roll back deregulation by at least a decade. There’s your bailout.
VooDoo Economics 101: Attention bankers and insurance execs. Market tanking? Having trouble maintaining the amount of capital reserves your regulator requires to protect your depositors or policyholders? Just suspend mark to market value rules and carry your reserve's securities on your books at cost (the price you paid for them) rather than at their current market value. Presto your reserves are up, no crisis, no bailout necessary and no cost to any one. Plus you restore a level of opaqueness to your business operations that will shield you from the prying eyes of rating services and investors not tolerated since the twenties. MORE OF THE SAME FROM JOHN MCCAIN.
VooDoo Economics 101: Attention bankers and insurance execs. Market tanking? Having trouble maintaining the amount of capital reserves your regulator requires to protect your depositors or policyholders? Just suspend mark to market value rules and carry your reserve's securities on your books at cost (the price you paid for them) rather than at their current market value. Presto your reserves are up, no crisis, no bailout necessary and no cost to any one. Plus you restore a level of opaqueness to your business operations that will shield you from the prying eyes of rating services and investors not tolerated since the twenties. MORE OF THE SAME FROM JOHN MCCAIN.
I was astonished by the $700B bailout. When dot com, telecom and airlines melt down at 2001. Hundreds of billions vanished. Government did not bail out anyone. High tech industries spent years to climb out from the hole. Telecom and airlines still have not fully recovered. Recently oil price crisis send airlines and automobile industries into a tail spin. Where was the bail out? People take risk and so be it. Why banking industry deserves a different treatment? I am no different from average Main street folk. I have suffered from recent crisis but let the market corrects itself. We do not need to nationalize the mortgage market
Mark-to-market accounting rules are what uncovered this disaster. Eliminating them will only hide the real problems from investors, and eventually the truth will come out. Non-accounting professionals shouldn't be dealing with this. No one understands it in the political world, especially not Barack Obama or John McCain. Also, banks will resist the FDIC insurance increases - they pay it, so good luck passing it along. These ideas seem worthless at this point.
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