‘Great progress’ in US bail-out
Posted by admin on 28 September, 2008 under Business news | 
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US congressional leaders say they have reached the broad outline of a rescue plan for the American financial system.
Democratic House Speaker Nancy Pelosi said “great progress” had been made – but details remain to be worked out.
The Bush administration wants $700bn (£380bn) to be able to buy bad debt that is freezing up financial markets.
A vote could be held in the House of Representatives as early as Sunday, with negotiators keen to reassure the markets before they reopen on Monday.
The deal proposes that the government would spend the $700bn to buy up bad mortgage-related debts from US banks, borrowing the cash from the money markets by issuing more government debt.
A White House spokesman welcomed the announcement and praised the efforts of the negotiators.
“We’re pleased with the progress tonight and appreciate the bipartisan effort to stabilise our financial markets and protect our economy,” said Tony Fratto.
“We’ve made great progress toward a deal which will be effective for all Americans” Henry Paulson
The outline deal gives the treasury secretary powers to oversee the two-year plan, but critics have insisted on the inclusion of greater oversight and reporting.
The BBC’s Justin Webb in Washington says the tentative agreement that appears to have been reached is thought to include a measure to limit the pay for executives of companies which seek financial assistance, which was a key demand of the Democrats.
At the request of Republicans, who have strongly criticised some elements of the administration’s proposal, the accord is believed to include the setting up an insurance program for mortgage-backed securities.
‘All night’
US Treasury Secretary Henry Paulson, who took part in the talks, said that Congressional leaders had been “working very hard”.
“We’ve made great progress toward a deal, which will work and will be effective in the marketplace, and effective for all Americans,” he told a news conference.
But Ms Pelosi said the deal had to be committed to paper before it could be formally agreed.
Senate Democratic leader Harry Reid said Congress hoped to be able to make an announcement on the deal later on Sunday.
“We’re committing it to paper tonight and our people will work all night long,” he said.
Congressional leaders are trying to finalise the deal in time for the opening of the Asian markets on Monday morning.
The BBC’s Adam Brookes in Washington said: “In the coming days everyone will be looking at the credit markets, to see if banks are sufficiently relieved to start lending to each other again.
“The psychology of the markets is what everyone is waiting to see.”
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