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US leaders reach tentative deal on landmark bailout plan
House Speaker Nancy Pelosi announces $700 billion bailout of imperiled financial markets, but says it still has to be put on paper.
- AP
- Published: 09:58 September 28, 2008
- Image Credit: AP
- Nancy Pelosi announced that a tentative deal had been reached on the bailout plan.
Washington: Congressional leaders and the Bush administration reached a tentative deal early on Sunday on a landmark bailout of imperiled financial markets whose collapse could plunge the nation into a deep recession.
House Speaker Nancy Pelosi announced the $700 billion accord early on Sunday, but said it still has to be put on paper.
"We've still got more to do to finalise it, but I think we're there," said Treasury Secretary Henry Paulson, who also participated in the negotiations in the Capitol.
"We worked out everything," said Senator Judd Gregg, the chief Senate Republican in the talks. He said the House should be able to vote on it on Sunday, and the Senate could take it up on Monday.
The plan calls for the Treasury Department to buy deeply distressed mortgage-backed securities and other bad debts held by banks and other investors.
The money should help troubled lenders make new loans and keep credit lines open. The government would later try to sell the discounted loan packages at the best possible price.
At the insistence of House Republicans, some money would be devoted to a program that would encourage holders of distressed mortgage-backed securities to keep them and buy government insurance to cover defaults.
The legislation would place limits on severance packages for executives of companies that benefit from the rescue plan, but details were sketchy.
Also, the government would receive stock warrants in return for the bailout relief, giving taxpayers a chance to share in financial companies' future profits.
To help struggling homeowners, the plan requires the government to try renegotiating the bad mortgages it acquires with the aim of lowering borrowers' monthly payments so they can keep their homes.
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