WASHINGTON (AFP) — US lawmakers agreed a 700-billion-dollar bailout for debt-stricken Wall Street banks and sent the legislation aiming to stem the US financial crisis for Congress to start voting on Monday.
A compromise package, unveiled Sunday after tense negotiations between rival party leaders and White House officials, will go first before the House of Representatives.
The plan, anxiously awaited by world markets, is not yet certain to be approved however.
The largest government economic intervention since the Great Depression of the 1930s aims to shore up the economy after the bursting of US housing bubble ravaged the global banking system and dried up credit.
President George W. Bush praised the draft legislation, saying the rescue was needed "to help protect our economy against a system-wide breakdown."
Bush, who was due to make a statement early Monday, said the plan "sends a strong signal to markets around the world that the United States is serious about restoring confidence and stability to our financial system."
The package gives the treasury secretary authority to buy up toxic mortgage-related assets in troubled banks in hopes of easing the credit flow and reviving the housing market.
Congressional leaders, mindful of the looming November 4 presidential election, had been rushing to strike a deal before global markets reopened for the week.
Japanese share prices rose 0.46 percent in morning trade on Monday after the deal but European markets opened down.
With some conservative Republicans and liberal Democrats steadfastly opposed to the plan, it was unclear if the bailout would win approval.
"We now have a deal that promises to bring near-term stability to our financial turmoil, but at what price?" Republican Congressman Michael Pence, a critic of the bailout, asked in a letter to colleagues.
White House hopefuls Republican John McCain and his Democratic rival Barack Obama offered cautious backing for the plan.
The accord came after several weeks of global financial market turmoil caused by the overexposure of US and international financial firms to the US subprime mortgage crisis.
Democratic lawmakers said the revised plan, which ran more than 100 pages, was better than the three-page White House version because it included stricter oversight and caps on executive pay packages.
"Working in a bipartisan way, we sent a message to Wall Street. The party is over," said House Speaker Nancy Pelosi.
"The era of golden parachutes for high-flying Wall Street operators is over. No longer will the US taxpayer bail out the recklessness of Wall Street."
The rescue , formally titled the Emergency Economic Stabilization Act of 2008, calls for the immediate release of 250 billion dollars so the government can buy up troubled assets.
The president is authorized to approve a further 100 billion dollars, but the plan gives Congress a veto over purchases above that limit and sets a ceiling for all purchases of 700 billion dollars.
The rescue operation will be overseen by a board including the chairman of the Federal Reserve, the treasury secretary and the chairman of the Securities and Exchange Commission.
The board will be one of four separate oversight agencies or processes, which also include a presence in the Treasury office and an independent inspector general that would monitor the treasury secretary's actions.
There will be no "golden parachutes" for CEOs or other executives who lose or leave their jobs at companies participating in the plan as long as the government holds equity in those firms.
Democratic lawmakers had called for financial firms to help pay for any losses incurred by the taxpayer but the draft legislation left the question open for the next president to tackle.
The White House sought to reassure anxious Republican lawmakers, saying the government expects assets acquired from troubled banks to eventually generate income and ease any potential burden on taxpayers.
The Washington Post welcomed the deal as an example of efficient political cooperation.
"As difficult and bitter as the process has been, the rescue, if it passes both houses of Congress, could be remembered as a case study in bipartisanship under extremely difficult circumstances," a Post editorial said.
Copyright © 2013 AFP. All rights reserved. More »
