White House finance meeting ends without deal

26 September 2008 00:51  [Source: ICIS news]

Bush meeting with members of Congress on ThursdayWASHINGTON (ICIS news)--An emergency meeting held on Thursday at the White House to hammer out final details of a $700bn (€476bn) financial bailout package has ended without success, a top Republican senator said late on Thursday.


Senator Mitch McConnell of Kentucky, the US Senate Republican leader, said that the meeting between President George Bush, his Treasury Secretary Henry Paulson and majority Democrat leaders from Congress was useful but apparently not conclusive.


“The meeting at the White House was constructive, and an opportunity to hear from all sides on how best to stabilise the economy,” McConnell said.


“But it is clear that more progress is needed and we must continue to work together quickly to protect our economy,” he said.


Earlier on Thursday, Senator Chris Dodd (Democrat-Connecticut), chairman of the Senate Banking Committee, and Representative Barney Frank (Democrat-Massachusetts), chairman of the House Finance Committee, were said to have reached agreement with their minority Republican counterparts on final terms of a bailout plan.


But the agreement reached among the leading members of Congress apparently did not receive immediate approval by Bush and Paulson.


Among other issues, the congressional plan was said to call for an incremental dispersal of the $700bn, beginning with an initial $250bn authorisation to the Treasury Department to buy up nonperforming mortgage loans and mortgage-based securities from distressed banks.


Paulson was said to have balked at what some termed a piecemeal funding approach.


Banking industry officials warned earlier on Thursday that half-measures would not work, given the seriousness of the national financial crisis.


Marty Regalia, a former Federal Reserve Board economist who now serves as chief economist at the US Chamber of Commerce, said that in dealing with any banking financial crisis, “you have to get in front of it and stop it from getting away from you”.


“You have to provide enough money to convince people and the markets that you are going to deal with the bank run, that you have more funds available than anyone might have thought necessary,” Regalia said.  “That’s what ends a panic.”


“But this is not just a bank failure,” Regalia said.  “You’re talking about the entire US financial system. You can’t nickel and dime this.”


McConnell did not indicate if or when another White House session on the bailout might be held.


($1 = €0.68)


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