Key White House meeting set for rescue plan

25 September 2008 18:38  [Source: ICIS news]

WASHINGTON (ICIS news)--A critical White House meeting at 16:00 Washington time (20:00 GMT) on Thursday between President George Bush and congressional leaders is expected to produce a financial rescue plan that will be approved by Congress by Monday, top US business officials said on Thursday.

 

Bush called for the meeting with majority Democrat and minority Republican leaders in Congress after telling the nation in a televised address late on Wednesday that the country is in a serious financial crisis that demands decisive government intervention.

 

“Today is the most important day,” said Bruce Josten, executive vice president for government affairs at the US Chamber of Commerce.

 

“The four o’clock meeting at the White House is important because it will put everyone in the same room on the same issue,” he said.

 

That meeting, he added, was expected to produce final details of a $700bn (€476bn) bailout plan to resolve what Josten termed “the most serious economic challenge this country has faced since the Great Depression”.

 

Josten said that Senator Chris Dodd (Democrat-Connecticut), chairman of the Senate Banking Committee, and Representative Barney Frank (Democrat-Massachusetts), chairman of the House Finance Committee, were working with their minority Republican counterparts to hammer out final terms of a bailout plan.

 

“Throughout the day, Dodd and Frank are going to be working to put final touches on a plan that they can take to the White House at four o’clock,” Josten said, based on information he said he gathered in a Thursday morning visit to Congress.

 

He said the two congressional financial affairs leaders “are getting closer and closer to a final package, working and building on the proposal presented to them last Friday by Secretary Paulson”.

 

Treasury Secretary Henry Paulson proposed a $700bn bailout plan that would allow Treasury to buy up nonperforming mortgage loans and mortgage-based securities that now burden major US financial institutions on Wall Street and smaller banks across the country.

 

However, that plan drew broad opposition from both Democrats and Republicans in Congress, who charged that relief cannot be given only to Wall Street banks and that more needed to be done to protect taxpayers and to provide relief for individual homeowners at risk of foreclosure.

 

“The reality is, and Congress must come to accept this, is that Wall Street is inextricably linked to Main Street,” Josten said.

 

“Wall Street may drive the flow of credit and capital, but it moves very quickly to Main Street where that credit availability supports investment, inventory acquisition, payrolls, job generation, expansion, everything,” he said.

 

Josten said negotiations among congressional leaders on both sides of the political aisle are focused on how to limit executive compensation at financial institutions that need rescue funds and how to allow bankruptcy court judges to adjust mortgage terms in order to avoid still more home foreclosures.

 

“We understand that Congress is going to continue in session through this weekend and that a vote in the Senate on a final package may come as soon as Sunday,” Josten said.

 

“In the House, Congressman Frank is of a mind that the House may have to come back early next week for a floor vote on the package, but that depends on how quickly they can come to agreement on the exact language” at today’s White House meeting, he said.

 

In a conference call with reporters, Josten and the chamber’s chief economist, Marty Regalia, warned that the rescue plan must be completed within days and cannot await a lame-duck session of Congress that could be held after the 4 November US elections.

 

“It would be foolhardy to wait for a lame-duck session of Congress to do this,” Regalia said.

 

“If this credit crisis is allowed to spread, it will take on a life of its own,” Regalia said, noting that small- and medium-size companies across the country already are starting to run out of credit and funds to maintain everyday operations.

 

Josten said he is confident that the president and congressional leaders will reach an agreement quickly.

 

“I think these people want to get this done, and I am convinced they are going to get it done,” he said.

 

($1 = €0.68)

 

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