US House leaders say bailout deal done by Sunday

26 September 2008 23:22  [Source: ICIS news]

WASHINGTON (ICIS news)--Top Democrat leaders in the US House said on Friday they expect to have final terms for the $700bn (€476bn) financial bailout package completed by Sunday.

 

Representative Barney Frank (Democrat-Massachusetts), chairman of the House Financial Services Committee and a principal player in drafting the legislative vehicle for the rescue plan, said he is confident that by Sunday the implementing bill will be complete and will be one that both Democrats and Republicans can support.

 

“I am confident that by Sunday we will have an agreement that people will understand on this bill,” Frank told a press conference.

 

House Speaker Nancy Pelosi (Democrat-California) said that progress had been made throughout Friday in discussions among Democrats and Republicans in Congress and with the White House and Treasury Secretary Henry Paulson.

 

“It is very hard to get a bill that both parties can support,” Pelosi said, but she added that the administration of President George Bush had agreed to some of the conditions on the bailout measure that both Democrats and Republicans in Congress had wanted.

 

“The bill has been improved, but the solution is still being debated” among Democrats and Republicans, she said.

 

Frank said that Congress and the White House have agreed that the original bailout proposal as presented by Paulson earlier this week will include “significant oversight” terms, giving Congress an active role in monitoring how the Treasury Department will use the $700bn to rescue troubled banks and financial institutions.

 

“We also have agreement from the White House on warrants, which will give the taxpayers some measure of protection, and limits on executive compensation,” Frank said.

 

As now drafted, the bailout bill will give the Treasury options - known as warrants - to acquire shares in those banks or institutions that the federal government rescues.  This provision in effect will give taxpayers an equity position in those firms that have been helped by the bailout plan.

 

The measure provides, said Frank, “that there will be limits on executive compensation” for those firms that benefit from the bailout package. Congress wants to ensure, he said, that no private sector financial officials will enjoy extravagant salaries or bonuses if their firms are rescued under the plan.

 

Frank said the Bush administration also has agreed to incremental disbursement of the $700bn worth of bailout funds, meaning that Treasury will be given perhaps $250bn in the first installment, with subsequent transfers to follow as needed.

 

Pelosi said that the developing bailout legislation still does not have provisions sought by congressional Democrats and Republicans for relief for homeowners facing foreclosure on their homes. A provision being considered would allow bankruptcy court judges to reset the terms of home mortgages so that homeowners can keep their properties and continue paying on the loans.

 

Another measure being sought by many members of Congress but not yet worked into the bill is a requirement that would put more of the $700bn debt on banks and other financial firms that stand to benefit from the rescue plan.

 

Pelosi also said she was confident that a deal can be completed over the weekend. “There was a poll released today that showed that 78% of the American people think that Congress must take action, and we will, but it is important that we can explain to the people how we have insulated them from this crisis on Wall Street,” she said.

 

Frank added: “We hope that over what remains of today and through tomorrow we will get this done.”

 

Asked if he thought the bailout package could be completed before the Asian markets open on Monday, Frank said he was confident that there will be a completed bailout agreement by Sunday.

 

Printing and circulation of the final legislation may take some additional time, he indicated, and votes to approve the bill in the Senate and House might not come until Monday and Tuesday, but the agreement should be completed by Sunday.

 

($1 = €0.68)

 

To discuss issues facing the chemical industry go to ICIS connect

By: Joe Kamalick
+1 713 525 2653

For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.

Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.

Printer Friendly