US 'reaches deal' on bank bail-out

Aljazeera

Congressmen struggled through the night to reach a deal [GALLO/GETTY] Leaders of the US congress have reached a tentative deal with the administration of George Bush, the US president, on a $700bn bail-out for the country's troubled financial institutions. Congressmen held overnight talks in an attempt to reach a deal before so they could vote on the legislation before the stock markets reopen on Monday. "We've made great progress," Nancy Pelosi, speaker of the House of Representatives, said early on Sunday after a night of marathon talks. "We have to get it committed to paper so we can formally agree." Henry Paulson, the US treasury secretary, who under the rescue plan would have unprecedent powers to use taxpayers' money to buy up bad debt, said: "I think we're there." "We've been working very hard on this ... And we've made great progress toward a deal, which will work and will be effective in the marketplace, and, you know, effective for all Americans." But Senator Judd Gregg, a leading Republican negotiator on the issue, was more cautious, saying that he would looked at the final wording of the agreement and consulting with colleagues before giving his final approval. "I think we are going to be able to have an announcement tomorrow, but these are difficult issues," he said. Hard sell The rescue plan for troubled financial institutions, proposed by the US administration, has proved a hard sell, both to Democrats and members of Bush's Republican party. "The refusal to agree to this package would have meant that everybody would run for cover and the markets would have spiralled downwards" Kishire Mahbubani, University of Singapore Kishire Mahbubani, Dean of the Lee Kuan Yew School of Public Policy at the University of Singapore, said it would have been "absolutely catastrophic" if the stock markets had opened on Monday without a deal in Washington. "The refusal to agree to this package would have meant that everybody would run for cover and the markets would have spiralled downwards because there were so many expectations of this $700bn package," he said. "It is very import to emphasise that we are in completely uncharted territory ... given the gravity of the situation the costs of doing nothing would have been enormous." Several polls this week showed many Americans were sceptical of the package backed by Bush. In one poll, 55 per cent of people said they did not believe the government should be responsible for bailing out private companies with taxpayers' money, even if the collapse could damage the economy. Voter anger Bob Corker, a Republican senator for Tennessee, who serves on the Senate Banking Committee, said congressmen were encountering extraordinary voter anger. Referring to his own senate office, he said, "We had, I'm going to guess, 3,500 calls this week about this particular issue. I've had 95 calls in support of it if that gives you any indication." The entire House of Representatives and one-third of the senate are facing re-election on November 4. Bush told Americans that he understood their frustration [AFP] Al Jazeera's Monica Villamizar, reporting from Washington, said that conditions had been applied to the rescue plan as part of the deal. "We understand that there will be a supervisory board which will oversee this programme and there will be some limits on the golden parachutes ... the enormous payouts given to senior executives when they leave financial institutions," she said. Bush told citizens in his weekly radio address that he understood taxpayer frustration for being asked "to pay for mistakes on Wall Street". But seeking to persuade Americans to support the deal, he said: "The failure of the financial system would mean financial hardship for many of you. "The result would be less economic growth and more American jobs lost. And that would put our economy on the path toward a deep and painful recession." Both Democrats and Republicans have expressed disquiet that so much money from taxpayers would go to private companies, but Bush assured voters in his radio address that over time the value of those assets would rise again. "This means that the government will be able to recoup much, if not all, of the original expenditure," he said.