SO I GUESS THE AMERICAN TAXPAYER SHOULD BAILOUT THE ENTIRE WORLD??
In a change from the original proposal sent to Capitol Hill, foreign-based banks with big U.S. operations could qualify for the Treasury Department’s mortgage bailout, according to the fine print of an administration statement Saturday night.
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The theory, according to a participant in the negotiations, is that if the goal is to solve a liquidity crisis, it makes no sense to exclude banks that do a lot of lending in the United States.
Treasury Secretary Henry Paulson confirmed the change on ABC's "This Week," telling George Stephanopoulos that coverage of foreign-based banks is "a distinction without a difference to the American people."
"If a financial institution has business operations in the United States, hires people in the United States, if they are clogged with illiquid assets, they have the same impact on the American people as any other institution," Paulson said.
"That's a distinction without a difference to the American people. The key here is protecting the system. ... We have a global financial system and we are talking very aggressively with other countries around the world and encouraging them to do similar things, and I believe a number of them will. But, remember, this is about protecting the American people and protecting the taxpayers. and the American people don't care who owns the financial institution. If the financial institution in this country has problems, it'll have the same impact whether it's the U.S. or foreign."
The legislative outline that went to Capitol Hill at 1:30 a.m. Saturday had said that an eligible financial institution had to have has “its headquarters in the United States.” That would exclude foreign-based institutions with big U.S. operations, such as Barclays, Credit Suisse, Deutsche Bank, HSBC, Royal Bank of Scotland and UBS. The theory, according to a participant in the negotiations, is that if the goal is to solve a liquidity crisis, it makes no sense to exclude banks that do a lot of lending in the United States.
But a Treasury “Fact Sheet” released at 7:15 Saturday night sought to give the administration more flexibility, with an expanded definition that could include all of those banks: “Participating financial institutions must have significant operations in the U.S., unless the Secretary makes a determination, in consultation with the Chairman of the Federal Reserve, that broader eligibility is necessary to effectively stabilize financial markets.”
The major change in the suggested eligibility requirements is the biggest change that Treasury publicly made after a day of briefings and conversations with Capitol Hill, and is likely the first of many.
Aspects of the $700 billion, two-year proposal that are still under negotiation include what, if anything, will be added to the administration’s simple but sweeping proposal. And the parliamentary route, such as what committees or hearings might be involved, has not been finalized.
House Financial Services Committee Chairman Barney Frank (D-Mass.) has a hearing scheduled for Wednesday that is likely to focus on the proposal.
Under what congressional officials called a likely scenario, the measure could go to the House floor on Thursday, with passage expected the same day.
The Senate could take the package up as soon as Friday and send it to President Bush for his signature, although the Senate schedule is less predictable and had not been determined.
Officials expect passage by huge margins in both chambers, since Paulson and Federal Reserve Chairman Ben Bernanke have told congressional leaders the country’s financial stability depends on it.
House Democrats plan to insist on adding protections for homeowners facing foreclosure, and want to add measure to help homeowners facing bankruptcy, and an executive compensation restriction designed to prevent golden parachutes for the heads of troubled institutions.
Sen. Barack Obama (D-Ill.), who was supportive of the bailout concept in a statement released Friday, thinks that “whatever gets done in Congress has to protect Main Street,” senior adviser Stephanie Cutter said on MSNBC on Saturday.
On “Fox News Sunday,” Paulson told Chris Wallace that he would resist the Democrats' desired limits on executive compensation.
"If we design it so it's punitive and institutions aren't going to participate, this won't work the way we need it to work.," Paulson said. "Let's talk executive salaries: There have been excesses there. I agree with the American people. Pay should be for performance, not for failure. We've got work to do in that regard. We need to do that work. But we need this system to work. And so reforms need to come afterwards. My whole objective with the plan we have is to give us the maximum ability to make it work.”
And the secretary told NBC’s Tom Brokaw on “Meet the Press” that he doesn’t want new regulations simultaneously: “That's not doable to do that immediately. But we very much need new regulations.”
Senate Banking Committee Chairman Chris Dodd (D-Conn.) told Stephanopoulos on ABC: “If we’re going to spend taxpayer money to get rid of bad debt in these places, what is the reciprocal obligation … from the firms? … I think there’s going to be a strong interest to deal with the Main Street aspects.” Appearing with him, House Republican Leader John Boehner retorted: “We’ve already dealt with that, when we had the housing bill last summer. I didn’t vote for it, because it’s 300-billion-dollar bailout for scam artists and speculators and others around the housing industry. But there are a lot of tools in there to help the Federal Housing Administration deal with the foreclosure problem that’s out there. We need to rise above partisan politics … and deal with this as adults
In a change from the original proposal sent to Capitol Hill, foreign-based banks with big U.S. operations could qualify for the Treasury Department’s mortgage bailout, according to the fine print of an administration statement Saturday night.
<TABLE class=ad_slug_table cellSpacing=0 cellPadding=0 border=0><TBODY><TR><TD align=middle>[SIZE=-2]ADVERTISEMENT[/SIZE]
</TD></TR></TBODY></TABLE><SCRIPT language=javascript>if(window.yzq_d==null)window.yzq_d=new Object();window.yzq_d['PcfwN0wNBlI-']='&U=13g9ftg2s%2fN%3dPcfwN0wNBlI-%2fC%3d628479.12783941.13071213.12367550%2fD%3dLREC%2fB%3d5250412%2fV%3d1';</SCRIPT><NOSCRIPT></NOSCRIPT>The theory, according to a participant in the negotiations, is that if the goal is to solve a liquidity crisis, it makes no sense to exclude banks that do a lot of lending in the United States.
Treasury Secretary Henry Paulson confirmed the change on ABC's "This Week," telling George Stephanopoulos that coverage of foreign-based banks is "a distinction without a difference to the American people."
"If a financial institution has business operations in the United States, hires people in the United States, if they are clogged with illiquid assets, they have the same impact on the American people as any other institution," Paulson said.
"That's a distinction without a difference to the American people. The key here is protecting the system. ... We have a global financial system and we are talking very aggressively with other countries around the world and encouraging them to do similar things, and I believe a number of them will. But, remember, this is about protecting the American people and protecting the taxpayers. and the American people don't care who owns the financial institution. If the financial institution in this country has problems, it'll have the same impact whether it's the U.S. or foreign."
The legislative outline that went to Capitol Hill at 1:30 a.m. Saturday had said that an eligible financial institution had to have has “its headquarters in the United States.” That would exclude foreign-based institutions with big U.S. operations, such as Barclays, Credit Suisse, Deutsche Bank, HSBC, Royal Bank of Scotland and UBS. The theory, according to a participant in the negotiations, is that if the goal is to solve a liquidity crisis, it makes no sense to exclude banks that do a lot of lending in the United States.
But a Treasury “Fact Sheet” released at 7:15 Saturday night sought to give the administration more flexibility, with an expanded definition that could include all of those banks: “Participating financial institutions must have significant operations in the U.S., unless the Secretary makes a determination, in consultation with the Chairman of the Federal Reserve, that broader eligibility is necessary to effectively stabilize financial markets.”
The major change in the suggested eligibility requirements is the biggest change that Treasury publicly made after a day of briefings and conversations with Capitol Hill, and is likely the first of many.
Aspects of the $700 billion, two-year proposal that are still under negotiation include what, if anything, will be added to the administration’s simple but sweeping proposal. And the parliamentary route, such as what committees or hearings might be involved, has not been finalized.
House Financial Services Committee Chairman Barney Frank (D-Mass.) has a hearing scheduled for Wednesday that is likely to focus on the proposal.
Under what congressional officials called a likely scenario, the measure could go to the House floor on Thursday, with passage expected the same day.
The Senate could take the package up as soon as Friday and send it to President Bush for his signature, although the Senate schedule is less predictable and had not been determined.
Officials expect passage by huge margins in both chambers, since Paulson and Federal Reserve Chairman Ben Bernanke have told congressional leaders the country’s financial stability depends on it.
House Democrats plan to insist on adding protections for homeowners facing foreclosure, and want to add measure to help homeowners facing bankruptcy, and an executive compensation restriction designed to prevent golden parachutes for the heads of troubled institutions.
Sen. Barack Obama (D-Ill.), who was supportive of the bailout concept in a statement released Friday, thinks that “whatever gets done in Congress has to protect Main Street,” senior adviser Stephanie Cutter said on MSNBC on Saturday.
On “Fox News Sunday,” Paulson told Chris Wallace that he would resist the Democrats' desired limits on executive compensation.
"If we design it so it's punitive and institutions aren't going to participate, this won't work the way we need it to work.," Paulson said. "Let's talk executive salaries: There have been excesses there. I agree with the American people. Pay should be for performance, not for failure. We've got work to do in that regard. We need to do that work. But we need this system to work. And so reforms need to come afterwards. My whole objective with the plan we have is to give us the maximum ability to make it work.”
And the secretary told NBC’s Tom Brokaw on “Meet the Press” that he doesn’t want new regulations simultaneously: “That's not doable to do that immediately. But we very much need new regulations.”
Senate Banking Committee Chairman Chris Dodd (D-Conn.) told Stephanopoulos on ABC: “If we’re going to spend taxpayer money to get rid of bad debt in these places, what is the reciprocal obligation … from the firms? … I think there’s going to be a strong interest to deal with the Main Street aspects.” Appearing with him, House Republican Leader John Boehner retorted: “We’ve already dealt with that, when we had the housing bill last summer. I didn’t vote for it, because it’s 300-billion-dollar bailout for scam artists and speculators and others around the housing industry. But there are a lot of tools in there to help the Federal Housing Administration deal with the foreclosure problem that’s out there. We need to rise above partisan politics … and deal with this as adults
