TOPICS > Economy

Lawmakers Work to Hammer Out Deal on Financial Bailout

BY Admin  September 25, 2008 at 2:30 PM EST

People walk on Wall Street; AP

Sen. Christopher Dodd, D-Conn., the chairman of the Senate Banking Committee, said House and Senate negotiators have reached “fundamental agreement” on a set of principles guiding a Wall Street bailout bill, according to Reuters.

Dodd told reporters that he thought Congress could act within the “next few days” to pass a bill.

However, the House ‘ Republican leader said later Thursday that his party has not yet agreed to a deal on the legislation, but he said he was encouraged by progress.

Rep. John Boehner of Ohio, told news agencies in a statement: “I am encouraged by the bipartisan progress,” but “House Republicans have not agreed to any plan at this point.”

Lawmakers were believed to be aiming to reach a consensus on the rescue plan in time for rare bipartisan emergency meeting Thursday afternoon with President Bush and the two men competing to succeed him, Democrat Barack Obama and Republican John McCain.

The initial bailout plan sought to add liquidity to financial markets by authorizing Treasury department officials to use some $700 billion in taxpayer funds to purchase toxic mortgage-related securities held by many financial firms. That plan, however, faced toughed scrutiny in Congress and from American citizens, who have reportedly flooded lawmaker phone lines and e-mail boxes with bailout complaints.

Lawmakers were in a frenzy of meetings trying to iron out the deal Thursday morning, with Treasury Secretary Henry Paulson also expected to work the phones.

“Now it’s time for both sides to roll up their sleeves, get together in a room and hash this out once and for all,” Sen. Charles Schumer, the New York Democrat who chairs the congressional Joint Economic Committee, said in a written statement.

On Wednesday, President Bush echoed calls from Fed chief Ben Bernanke and Treasury Secretary Henry Paulson for quick action on the plan, warning that “our entire economy is in danger” in a prime-time address.

“We’ve made a lot of progress. I think the House and Senate Democrats have come to agreement. We’re now going to talk to Republicans. We’re in substantial agreement on most of the issues,” said Rep. Barney Frank, chairman of the House Financial Services Committee, according to Reuters.

As lawmakers struggled to pull together a plan, grim new data emerged on the health of the U.S. economy.

Orders for costly U.S. manufactured goods fell sharply in August and new-home sales hitting a 17-year low; the median sales price for new single-family homes fell 5.5 percent to $221,900, the lowest in almost four years, new reports show.

In addition, new claims for jobless benefits, impacted in part by hurricanes on the Gulf Coast, shot up last week to 493,000, their highest levels in seven-years.

General Electric Co, commonly seen as a bellwether of the health of the U.S. economy, warned Thursday that the crisis in the global credit markets could drive down their profit as much as 12 percent this year.

Two of GE Capital’s largest businesses loan to mid-seized companies and investments in commercial real estate, both of which have taken huge hits in the credit crunch. GE said it plans to sell off more than $10 billion in real estate assets and scale back its financial branch.

The crisis in the U.S. financial sector is also reverberating worldwide, as hundreds of people in Asia lined up outside the Hong Kong branch of the Bank of East Asia, some sleeping on the street overnight, to withdraw their savings. There are fears that the bank could be the first in Asia to fall victim to the credit crisis.

German Finance Minister Peer Steinbrueck said one possible outcome of the crisis would be a less dominant role for the United States in the global financial system. “The United States will lose its superpower status in the world financial system. The world financial system will become more multi-polar,” he told the AP.

British Prime Minister Gordon Brown is expected to visit Washington for an emergency meeting with President Bush on Friday to discuss the global economy, a spokesman for Brown said Thursday.