Congressional leaders and Treasury Secretary Henry Paulson emerged after hours of tense negotiations, just half hour after midnight on Sunday morning, to announce that a deal on the $700 billion bailout plan had finally been reached. Seemingly, all that remains to be done at this point is to commit the legislation to paper.
The bailout plan, which would authorize the Treasury to begin purchasing distressed debt securities from financial companies affected by the record number of home foreclosures, still needs to be drafted in its final form, but a formal announcement is expected to come some time Sunday.
Speaking before the media, the negotiators hesitated to provide specific details, but the plan is likely to include oversight, forbearance in terms of mortgage foreclosures, and limits on executive compensation for some firms, as well as give the government some authority to take equity stakes in firms that sell soured assets to the
According to Wall Street Journal, the consensus so far is for the Treasury to receive $250 billion immediately from the total amount, and another $100 billion if needed as certified by the president. The remaining $350 billion would be subject to a Congressional vote. The WSJ also notes that a person familiar with the discussions said,
Treasury was pushing for a larger initial authority, likely around $500 billion.
Secretary Paulson and Federal Reserve Chairman Ben Bernanke have repeatedly stressed the importance of the rescue plan as a crucial element to revive lending and restore the flow of credit to the
Congressional negotiators also said they consulted with outside experts including billionaire investor Warren Buffett “amid a focus on market reaction to the plan.”