MercoPress. South Atlantic News Agency

US Congress agrees to vote Monday bail-out package

The United States Congress is set to vote on Monday the largest single financial bailout in US history after leaders from both parties nailed down the details of the package, following long days and nights of tense and sometimes tempestuous negotiation.

On Sunday the office of House Speaker Nancy Pelosi released a first draft of the text and aides said they were confident that Representatives would vote Monday morning to approve the package authorizing the US Treasury to spend as much as 700 billion US dollars to relieve banks of distressed debt. Aware of the size of the stakes, negotiators had been racing to complete the deal in time to reassure investors before the opening of financial markets in Asia and later London and New York. Members of Congress, moreover, are anxious to leave Washington and return to their constituencies ahead of the election in November. After the House vote the Senate should follow tomorrow or Wednesday. Although party leaders expect the package to be approved, some conservatives may still vote against it. Barack Obama, the Democrat presidential nominee, said he would back the deal, if reluctantly. "My inclination is to support it," he told CBS. "We have to remember how we got here. Not so much to allocate blame, but to understand the choices that will face the next president". His Republican rival, John McCain, also offered his support to the bail out package. Most obstacles to the deal were cleared during intense negotiations that went late into Saturday night. After the proposed bill was committed to paper – over 101 pages – Ms Pelosi and other Democrat leaders emerged Sunday night to announce they were ready for Monday's vote. While the bill remains inspired by the original plan presented nearly a week ago by the Treasury Secretary Henry Paulson, (three pages and unfettered powers for the Secretary) it includes several new elements, including executive pay caps, designed to calm anger among voters that so much taxpayer money is being used to correct the failings of Wall Street and among conservative Republicans in Congress for whom it looked like an affront to free-market capitalism. "We sent a message to Wall Street, the party is over" Ms Pelosi announced. "The era of golden parachute severance packages is over." The changes meant the Treasury no longer has carte blanche simply to purchase debt to help the banks out. The 700 billion will not be made available all at once, but rather in tranches. The first 250 billion will be available immediately with an additional 100 billion on offer "upon a report from Congress". The final 350 billion will be released thereafter if Congress sees fit. Key to ending the logjam was the provisions capping pay, bonuses and golden parachutes for top executives at any institution benefiting from the program. However, a proposal first floated by Mr McCain, to peg the pay of bank chiefs to the highest salary available to government officers – 400,000 US dollars – was discarded. Other amendments to the plan include giving considerable oversight powers to Congress, allowing the government to take some equity stake in companies that receive help and empowering the Treasury to take steps to help homeowners struggling with mortgage payments to avoid foreclosure. The Treasury will also have the option of offering government insurance to banks weighed down by distressed debt, something pushed for by the Republicans as a means to reducing the direct burden on taxpayers. But after the dramas of the past few days, no one last night was taking anything for granted. Only when the bill goes to the floor will it be known whether rebellious House conservatives have been mollified. But hopes remained high that there will be the votes to assure the package's passage. No economist dared predict how effective the package will be. Still to be worked out, for instance, is how the assets that the Treasury is proposing to buy should be priced. However a failure to agree on the bailout could have "resulted in a major meltdown of our (US) economy" Christopher Dodd, the Senate Banking Committee chairman, said.