~Congress has created a broad outline of a rescue plan to prevent economic devastation after a historical surge of bad mortgage debits collapsed several financial institutions.
By Tiffany Shorter
Progress has finally arrived after over ten days of petty politics. Taxpayers, Wall Street and world stakeholders are keen to know the details.Democrat House Speaker Nancy Pelosi says there is an outline agreement but the particular conditions remain to be articulated. A vote is planned in the House of Representatives Monday. Congress wants to assure American taxpayers and foreign investors that the US economy can recover from this set back. Announcing the plan today is a good way to start the opening of the markets tomorrow. Main Street, the coined term that the media uses to describe ordinary taxpayers, have complained that they don’t want their tax dollars going to help the wealthy on Wall Street.
Washington has failed to emphasize that without this bailout, many institutions cannot borrow the funding needed to cover operation costs. Such expenses put workers’ salaries are at risk. Main Street may not get a paycheck with the credit markets frozen due to the lack of government intervention at this time. Wall Street’s woes also affect the world markets. They worry about the demoralizing effect if a plan is not executed soon.
Europe and Asia saw falling stocks prices Friday partly due to the surprising collapse of Washington Mutual, the largest US savings and loan group. If countries lose faith in the US, they may pull their investments and refuse to lend to America. Emerging markets such as China could decide to invest inward, in their domestic economy, which would be more bad news for all Americans. The deal, a two-year plan, proposes that the government spend $700 billion to purchase bad mortgage-related debts from banks. To fund the bailout the treasury must borrow from the money markets by issuing more government debt. This deal gives the treasury secretary authority to monitor the execution of the deal, but critics want greater oversight and reporting.
Republicans, who claimed to be isolated from earlier talks, are satisfied with the condition of insurance program for mortgage-backed securities. Democrats won a measure of limiting executive salaries for companies that want financial assistance. Pelosi's office said the new agreement would immediately issue $250 billion, and another $100 billion would be spent under the discretion of President Bush.The remaining $350 billion is on hold until Congress reviews and approves of conditions of its release. More details are in development. What is known is that Congress must vote for this bill by Monday- Tuesday the latest. We should all hope it is a sufficient start to prevent a further downturn and restore confidence in the US economy.
~Tiffany Shorter-is a blogger on Hip-Hop Republicans and active international affairs activist. Before joining Hip-Hop Republicans, she was a member of Republicans Abroad Belgium responsible for coordinating outreach events and political discussions. She has come to New York after living in aboard in Belgium where she earned a Master's degree in International Law from the Brussels School of International Studies.
-UPDATE...BAILOUT FAILED TO PASS