Susan Walsh/AP
Chairman of the House Financial Services Committee, Rep. Barney Frank, D-Mass., talks with
reporters after a meeting on the market turmoil on Capitol Hill in Washington.

Congress Reaches Bailout Agreement

September 25, 2008 04:22 PM
by Josh Katz
Members of Congress have indicated that a general agreement to bail out Wall Street has been reached with bipartisan support.
The House and the Senate have both come to an agreement on an outline for the government’s $700 billion Wall Street bailout plan. In a meeting that lasted almost three hours, they made some revisions to the original rescue plan; the revised plan will be presented to the Treasury.

Although work remains to be done on the bill before it is finalized, “lawmakers in both parties said that few substantive differences and no major obstacles remained,” The New York Times reports.

In the plan, the Treasury Department will “buy up bad mortgage securities from banks in an effort to get them to lend again,” according to CNN. The main revisions to the bill involve the disbursement of money to the government, and executive pay. With the new bill, Congress will disperse the $700 billion in installments. Pay for the executives of firms seeking government help will be limited. The bill also gives the government equity in some of the firms “so that taxpayers have a chance to profit if the companies prosper in the months and years ahead,” the Times writes.

Under the proposal, Congress will allocate $250 billion for the bailout right away, and then another $100 billion. Congress would be able to withhold the remaining $350 billion by overriding a presidential veto, according to Politico.

The accord comes before the meeting involving President George W. Bush, Ariz. Sen. John McCain, Ill. Sen. Barack Obama, and congressional leaders, scheduled to take place at 3:55 p.m. EDT. As such, some Democrats “worry that the White House meeting will become a photo and political opportunity for McCain at the expense of Obama,” Politico reports.

News about the agreement gave the stock market a needed boost. By midday, the Dow Jones Industrial Average had jumped more than 290 points.

Background: Behind the bailout


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