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Current Events Work here Financial rescue bill =Utah delegation dubious about $700B bailout= Members say they want more details, options and time to considerBy Matt CanhamThe Salt Lake TribuneArticle Launched: 09/24/2008 12:13:11 AM MDT WASHINGTON - Republicans and Democrats in Congress voiced their complaints Tuesday about a Treasury Department plan to bail out distressed financial firms, saying it is too big, hands over too much authority and is moving too fast. Utah's federal office holders from Republican Sen. Orrin Hatch to Democratic Rep. Jim Matheson expressed deep reservations about the $700 billion bailout plan that seeks to rid financial firms of toxic mortgage-related debt. The Treasury Department announced the proposal last Thursday, sending over a sparse three-page draft bill and expecting action by the end of this week, when Congress planned to adjourn for the year. "Congress has been put in a remarkably awkward position," said Rep. Jim Matheson, D-Utah. Wall Street and financial titans worldwide expect Congress to pass what would be the biggest government intervention in the economy since the Great Depression by Friday. Matheson doesn't want the markets to crash due to inaction, but he also doesn't want to back such an expensive bill without some assurances that it will have the desired effect. He questions whether this proposal will stabilize markets and wants to hear from financial experts who think otherwise. "When people rush to decisions, sometimes they are not always the right decisions," he said. Utah Sen. Orrin Hatch said he is also far from impressed with the current plan. "I am not interested in putting present and future taxpayers' money at risk for the sake of bailing out those who have made greedy or foolish decisions," he said. Sen. Bob Bennett, as a member of the Senate Banking Committee, is the Utahn most involved in the debate. He is also the one most reserved in his comments about the Treasury plan. He participated in a banking committee hearing Tuesday where Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke pitched the $700 billion bailout. He questioned Paulson on the details, pointing out the more the Treasury pays for the bad debt, the more it helps banks, but the more it costs taxpayers. "My number one concern with the Fed and the Treasury's proposal is that we don't know the details of how it is going to work," said Bennett, who is part of a bipartisan group working on the details of a bill. Rep. Chris Cannon, R-Utah, said instead of rushing through a quickly crafted bill, Congress should stay in Washington for a few more weeks to flesh out the bailout. Because as it stands now, Cannon is probably going to vote against the bill. "I think it is highly unlikely that I would vote for a bill that gives vast authority with no limitations and no descriptions," he said. Rep. Rob Bishop, R-Utah, worries about the costs to taxpayers and "a permanent shift of power and financial responsibility to the federal government." But like many members of Congress, he says they must do something. "There aren't any good options before us, and I don't like the idea of a bailout, but doing nothing might be the worst option," he said. **//mcanham@sltrib.com

The Bailout: Politics Bailout Agreement Reached Brian Wingfield and Joshua Zumbrun 09.28.08, 2:02 AM ET

WASHINGTON, D.C.-Key lawmakers in Congress have reached a tentative agreement on a bailout proposal that they expect to roll out to their colleagues for final approval Sunday morning.

"We've made great progress toward a deal which will work and be effective in the marketplace," Treasury Secretary Henry Paulson, flanked by a bipartisan group of lawmakers, told reporters at 12:30 a.m. Sunday--after nine hours of negotiations that included numerous phone calls with the White House and the input of several top economic minds, including billionaire investor Warren Buffett.

"We've still got more to do to finalize it, but I think we're there," Paulson added. "So far, so good."

The "agreement in principle," as Sen. Kent Conrad, D-N.D., described it, is a $700 billion plan that will allow the Treasury Department to buy troubled mortgage-backed securities from firms that are having difficulty selling these assets in the marketplace.

The bailout, to be financed by government bonds, includes provisions to limit executive compensation for the firms that are being bailed out, an equity stake in those firms for taxpayers, an oversight board to account for the bailout process, and a measure to help prevent mortgage foreclosures. The $700 billion will be doled out in tranches of $250 billion immediately, $100 billion upon the approval of the president and $350 billion upon the approval of Congress.

Lawmakers also said there is language in the plan to allow the government to recover some of the money it is spending to buy troubled assets, as well as a provision that allows firms to buy insurance for toxic securities--something House Republicans had requested.

Is it a formal deal? As close to one as lawmakers could hash out, following marathon negotiations. Congressional staff members are working through the night to put the agreement on paper so other members of Congress can examine it before giving it final approval Sunday. A deal had appeared within grasp Thursday afternoon but fell apart that night when a group of House Republicans issued a rival plan. Under their proposal, companies would pay premiums to insure their frozen mortgage-backed securities, instead of having the Treasury use taxpayer dollars to buy them. In addition, the plan--the fine details of which are still vague at this point--would provide some companies with tax relief, remove unspecified banking regulations and allow them to temporarily suspend dividend payments to free up capital.

Asked after the meeting if the expanded mortgage insurance program needed to be in a compromise, House Minority Leader John Boehner, R-Ohio, said "Our goal here in attempting to come to an agreement is to do our best to protect the American taxpayer."

Sen. Chris Dodd, D-Conn., and Rep. Barney Frank, D-Mass., the respective chairmen of the House and Senate committees for banking, are continuing to support a modified version of the original $700 billion "Paulson Plan," as the administration's proposal has become known. Blunt participated in negotiations Friday and Saturday for House Republicans. Sen. Bob Corker, R-Tenn., said he's "very, very optimistic" that a deal will be worked out, and he's hopeful it will happen over the weekend.

Sen. Judd Gregg, R-N.H., says he believes distressed credit markets Friday morning may have shown lawmakers that there is not much time for discussion. "They're telling us we better do something," says Gregg, who will represent Senate Republicans in the negotiations.

The message that Paulson's plan is aimed at restoring liquidity is getting through to lawmakers. "We don't have a solvency problem, what we're trying to do is to restore liquidity," says Scott Talbott, senior vice president for government affairs at The Financial Services Roundtable, a banking-industry trade association that supports the basic idea of the Paulson Plan.

"I think the chances of it happening are excellent," Talbott says. "The goal is to try to get it done by Sunday, but it could easily slip a little into next week."

When President Bush said Friday morning that "the legislative process is sometimes not very pretty," it was the understatement of the year. And on the eve of the election, there's plenty of political gamesmanship, and even brinksmanship, on display.

Democrats want to stay as far away from being held responsible for the bailout as possible, and may not vote on the bill unless a majority of Republicans will also support. House Republicans can now say that at least they tried an alternative. It was likely that something akin to the Paulson plan--with a few add-ons to soothe reluctant Republicans and Democrats--would emerge over the weekend as the final bailout bill.

White House talks with lawmakers last night erupted into a "shouting match," according to one report. The top Republican on the Senate Banking Committee, Sen. Richard Shelby of Alabama, emerged from the discussions to tell reporters that there was no deal, contrary to what some members of Congress said earlier in the day.

Republican presidential candidate John McCain also became a central element in the debate. House Democrats have accused the Republican senator of slowing down the discussions by arriving in Washington to break the deadlock within his party, but not actually doing so. Both McCain and Democratic presidential candidate Barack Obama met with Congressional leaders at the White House Thursday evening. The meeting ended without any agreement from the different people at the table.

McCain had said he might not attend the debate but reversed course Friday morning and announced he would leave Washington to fly to Oxford, Miss., for the debate. A statement from the McCain campaign accused Obama of political posturing in last night's meeting at the White House. Obama said that he did not think injecting presidential politics into the negotiations was going to be helpful and did not think the debate should be postponed.

"Any time you have a plan this big that is moving this quickly, that requires legislative approval, it creates challenges," Bush said. He said members of Congress "should be allowed to express their opinions," but emphasized that "there is no disagreement that something substantial must be done.

SEPTEMBER 28, 2008, 11:44 A.M. ET Lawmakers Reach Tentative Bailout Deal By MICHAEL R. CRITTENDEN and SIOBHAN HUGHES

WASHINGTON -- Top U.S. policymakers emerged from hours of tense negotiations just after midnight with a tentative agreement on a deal to bail out U.S. financial markets and began working Sunday morning to commit the legislation to paper.

Treasury Secretary Henry Paulson, House Speaker Nancy Pelosi, (D., Calif.) and Senate Majority Leader Harry Reid (D. Nev.) were flanked by key negotiators in the Capitol as they announced that a $700 billion plan to have Treasury buy up toxic assets had been all but finalized after days of exhausting negotiations involving members, staff and representatives from the Bush administration.

Associated Press House Speaker Nancy Pelosi, Treasury Secretary Henry Paulson, right, Senate Majority Leader Harry Reid, second left, and Sen. Judd Gregg, left, announce a tentative deal on legislation regarding the financial crisis just after midnight Sunday. "I think we're there," an obviously tired Mr. Paulson said, a sentiment echoed in the statements of negotiators such as House Financial Services Chairman Barney Frank (D., Mass.) and Senate Banking Committee head Christopher Dodd (D., Conn.).

Those present said the bailout plan still needs to be drafted in its final form, a process staff members were expected to continue throughout the night in what one aide called a "marathon drafting session" in Speaker Pelosi's office just off the rotunda in the Capitol building. A formal announcement is scheduled for some time Sunday, though an exact time and location was not immediately available.

A summary of the tentative agreement released by Sen. Pelosi's office said the plan "gives taxpayers an ownership stake and profit-making opportunities with participating companies; puts taxpayers first in line to recover assets if a participating company fails; (and) guarantees taxpayers are repaid in full -- if other protections have not actually produced a profit."

The $700 billion would be available in phases. The first $250 billion will be "immediately available" to the Treasury Secretary, and $100 billion available "upon report to Congress," and $350 billion "available only upon Congressional action," according to a summary from the office of House Minority Whip Roy Blunt (R., Mo.), the No. 2 House Republican who was at negotiations.

A summary from Sen. Pelosi's office said the final deal included "cutting in half the administration's initial request for $700 billion and requiring Congressional review for any future commitment of taxpayers' funds."

The Pelosi summary also said the legislation will expand the range of firms that can sell troubled assets to the government to include pension plans, local governments and community banks serving "low- and middle-income families." (See Ms. Pelosi's summary.)

Associated Press Sen. Charles Schumer, left, Sen. Max Baucus and Sen. Jack Reed take a short break during ongoing negotiations on Capitol Hill Saturday. A House Democratic aide said the government would be able to receive warrants it could hold until maturity from financial firms on assets received either through auctions or through direct purchases.

The summary also said the legislation would institute new executive compensation requirements for participating companies, including "no multi-million dollar golden parachutes," limits on compensation generally, and the ability to recover "bonuses paid based on promised gains that later turn out to be false or inaccurate."

President George W. Bush spoke with Sen. Pelosi earlier in the evening about the discussions, and the White House welcomed news of the deal. "We're very pleased with the progress tonight and appreciate the extraordinary bipartisan efforts being made to stabilize our financial markets and protect our economy," White House spokesman Tony Fratto said.

The next step will involve selling the deal to rank-and-file lawmakers, who have been unhappy over signing on to a giant bailout package just weeks before the November elections. Rep. Blunt said that he planned to talk to colleagues and get reactions.

Lawmakers entered a new round of meetings shortly after 7:30 p.m. EDT, with pizzas headed to one office and a platter of cold cuts from sandwich chain Cosi being delivered into the House Speaker's office. By roughly 11:30 p.m., what Reid described as a "breakthrough" came in the form of an idea from Pelosi that was enough to advance talks.

"She took over at the last minute," a House staffer familiar with the talks said Sunday morning. "The last hour-and-a-half she really brought things together and made it possible to reach this point."

Pelosi also apparently found middle ground on a plan to allow the federal government to recoup money for taxpayers if the asset-purchase program isn't making money after a certain amount of time. A House leadership aide said early Sunday morning that details were not immediately available. But the general concept was to provide Congress with a mechanism that would be triggered perhaps within five years to allow lawmakers to offset some, if not all, of the bailout costs.

Offers and counteroffers were flowing back and forth all night. Among the offers extended by Democrats: an agreement to drop a proposal to devote 20% of potential profits to an affordable housing fund, according to a Senate staffer close to the talks.

A House staffer reached after the deal announcement was made confirmed that lawmakers did decide to drop the affordable housing fund proposals, which would have potentially directed billions to state and local governments to fund housing projects.

One of the biggest sticking points involved concerns that executives at troubled financial institutions would wind up benefiting with handsome pay packages as the government took on more risks. But Democrats emerging from the talks said a whole array of issues related to executive pay had been addressed, including issues involving "golden parachutes," the big pay packages that are sometimes awarded to departing executives.

Sen. Dodd told reporters that protections against golden parachute awards had made it into the final deal, along with an insurance component sought by House Republicans as an option for the Treasury to use if necessary and requirements that Treasury seek to mitigate and reduce foreclosures where possible.

Overall, staff said they expanded Treasury's original 2 1/2 page proposal. The agreement will include significant oversight of the asset purchase program, executive compensation restrictions, the potential for equity stakes in firms that participate in the asset-sale program, and other taxpayer protections.

As for foreclosure prevention measures, Pelosi's office said the legislation would allow the Treasury to work with cash-strapped homeowners whose mortgages are purchased by the federal government to refinance into a more affordable mortgage.

Other foreclosure-prevention measures include an extension of the tax holiday for homeowners who face foreclosure, as well as a tax break for community banks that held shares of Fannie Mae and Freddie Mac. The rescue plan will allow affected banks to take an immediate tax deduction on losses from investments in the two firms, which were taken over by the federal government earlier this month.

It also includes a bipartisan oversight board appointed by members of both parties in Congress, an inspector general to monitor Treasury decisions, and regular audits from the Government Accountability Office. Treasury will also have to post publicly and online transactions made through the troubled asset program. Unlike the original Treasury proposal, which would have given the department legal immunity in the program, the tentative agreement reached Saturday allows for judicial review of Treasury decisions.

Sen. Barack Obama (D. Ill.), the Democratic Party presidential nominee, said the tentative deal appears to embrace key principles he favors: better oversight, the potential for taxpayers to receive profits from the workout, CEO compensation limits and foreclosure protections.

"When taxpayers are asked to take such an extraordinary step because of the irresponsibility of a relative few, it is not a cause for celebration," Obama said in a statement Sunday. "But this step is necessary."

Republican nominee Sen. John McCain, interviewed by ABC's "This Week," said, "This is something that all of us will swallow hard and go forward with."

In a sign of how sensitive Congress is to market reaction, lawmakers stayed in touch with outside experts during the negotiations, including talking to billionaire investor Warren Buffett.

—The Associated Press contributed to this article. Write to Michael R. Crittenden at michael.crittenden@dowjones.com and Siobhan Hughes at siobhan.hughes@dowjones.com

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How did we get here and why?//** Who is senetor benett? Who is resonsible? Whats going to happen to the US citizens?