It would require the government to gain an equity stake in companies that benefit from the rescue. In an unusual Sunday session of the House, angry lawmakers denounce the plan. By Maura Reynolds and Nicole Gaouette, Los Angeles Times Staff Writers 3:32 PM PDT, September 28, 2008
WASHINGTON -- Congressional and administration officials unveiled their $700-billion rescue plan for Wall Street today, setting up the largest government intervention in the economy since the Great Depression.
The plan includes a program to purchase bad assets and an insurance program to underwrite others. It would also require the government to gain an equity stake in companies that benefit from the rescue, ensuring that taxpayers would make money once the assets regained some value. And the deal would require curbs on executive pay and the $700 billion to be released in installments.
"This agreement, while not perfect, is going to stabilize the economy and it's going to protect the taxpayers," Senate Majority Leader Harry Reid (D-Nev.) said.
The 110-page bill is posted on the website of the House Financial Services Committee. It is expected to be voted on by the House as soon as Monday and by the Senate on Wednesday.
"This is not about a bailout of Wall Street," said House Speaker Nancy Pelosi (D-San Francisco). "It's a buy-in so we can turn our economy around" and protect the assets of ordinary Americans.
Pelosi said she expected the legislation to pass with bipartisan support.
"This is not a Democratic bill," she insisted. "This is a bill that was sent by the president, improved by the Congress. . . . And we will need to have bipartisan support to pass this bill."
But the plan faces fierce opposition from Republicans and Democrats angry at what they say is a taxpayer bailout of Wall Street "fat cats." As the House opened for an unusual Sunday session, lawmakers from both parties rose, one after another, for one-minute speeches denouncing the agreement -- and signaling a continuing struggle as policymakers and their staff work out the final details.
"This morning we should be very much alarmed," said Rep. Scott Garrett (R-N.J.), addressing taxpayers directly. "Obviously, Washington is not listening to your wishes. Those who used to work for Goldman Sachs will support this deal. . . . Those who have blocked reform in the past will support this deal. I will not support this deal."
Rep. Marcy Kaptur (D- Ohio) railed against the agreement and the Wall Street financiers who would be helped. "These criminals have so much political power they can shut down the normal legislative process," she said.
Rep. Ted Poe (R- Texas) rose to compare the administration's urgings to rush a bailout plan to the pressure exerted on Congress to act after the Sept. 11 terrorist attacks.
"This is the same politics of fear we're hearing from the financial fat cats on Wall Street," Poe said. "Backroom deals trouble me because they usually turn out to be bad deals for America."
The conservative Texan was followed and echoed by the staunchly liberal Rep. Dennis J. Kucinich (D-Ohio), who said, "The $700-billion bailout is driven by fear, not fact."
Both caucuses will be meeting in the afternoon, including a Democratic offshoot called the "skeptics caucus," at which members will hear from economists who oppose the bailout plan.
In separate appearances on the Sunday talk shows, both presidential nominees said they were inclined to vote for it.
"I'd like to see the details, but hopefully yes," Sen. John McCain of Arizona, the Republican candidate, said on ABC's "This Week." "And the outlines that I have read of it, that this is something that all of us will swallow hard and go forward with. The option of doing nothing is simply not an acceptable option."
Sen. Barack Obama of Illinois, the Democratic nominee, told CBS' "Face the Nation," "Ultimately, I believe that we have to get something done. And so if I feel that those are meaningful provisions that provide some constraints on how the Treasury operates, and this is not going to be welfare for Wall Street, then my inclination is to support it because I think Main Street is now at stake. This could affect every sector of the economy."
The rescue plan, which grew from a three-page proposal sent to Capitol Hill by the Treasury secretary a week ago to more than 100 pages, would allow the federal government to purchase bad debts from ailing financial institutions in an effort to stave off more bankruptcies and provide cash for new loans to ease the credit market freeze-up.
The plan is expected to call for the money to be made available in installments instead of one enormous lump sum. It is also expected to include additional oversight of the government's spending, limits on the pay of executives of firms that receive government aid, help for homeowners at risk of foreclosure and a provision that taxpayers share in any profits from the sale of distressed assets.
A House GOP leadership aide said the agreement included an insurance program sought by Republicans under which financial institutions would pay premiums to help pay for bailing out less solvent companies. Democrats have noted that Treasury Secretary Henry M. Paulson considered such an approach unworkable because many firms are short of cash. One Democratic staffer likened the GOP insurance proposal to buying homeowners' insurance on a house that is already on fire.
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