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US lawmakers 'agree rescue deal' US lawmakers 'agree rescue deal'
(about 1 hour later)
US politicians have agreed on the details of $700bn Wall Street bail-out package to be sent to Congress for approval, a Republican negotiator says. US politicians have agreed the details of a $700bn Wall Street bail-out package to be sent to Congress for approval, a Republican negotiator says.
Senator Judd Gregg said the package could be voted on as early as Monday. Senator Judd Gregg said getting the deal approved soon was "absolutely critical to the state of the markets".
"Getting this done soon, promptly is absolutely critical to the state of the markets," he said. The measures would allow the Treasury to spend up to $700bn (£380bn) buying bad debts from ailing banks in the USA.
The measures would enable the US Treasury to spend up to $700bn (£380bn) taking over bad debts from ailing financial institutions.
It would be the biggest intervention in the markets since the Great Depression of the 1930s.It would be the biggest intervention in the markets since the Great Depression of the 1930s.
"We have given the [treasury] secretary the authority and the resources and the flexibility necessary... to hopefully be able to go forward and stabilize the credit markets and free up the credit markets," Gregg told reporters as he released the proposed plan in Washington. However, so far few details of the deal are know, and US lawmakers announced once before - on Thursday - that they had reached an agreement, only for the deal to fall apart in subsequent negotiations.
During the past two weeks, the global credit crunch has seen several financial institutions running into liquidity problems, where they cannot get the money to keep their daily business running.
  • In the United States' largest bank failure, Washington Mutual was taken over by regulators and sold on to JPMorgan chase
  • Several investment banks got into varying degrees of trouble, with Lehman Brothers collapsing, Merrill Lynch seeking refuge in a takeover by Bank of America and Morgan Stanley securing a large capital injection from a Japanese rival
  • US insurance giant AIG had to be bailed out by the US government, which effectively took an 80% stake in the firm
  • In the UK, meanwhile, mortgage lender Bradford & Bingley is set to be nationalised on Monday morning, with parts of the business sold on to other banks
Votes on Monday and Wednesday?
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 Senator Barack Obama Bail-out debate: For and againstDeal sticking pointsQ&A: US $700bn bail-out plan
"We have given the [treasury] secretary the authority and the resources and the flexibility necessary... to hopefully be able to go forward and stabilise the credit markets and free up the credit markets," Mr Gregg told reporters as he released the proposed plan in Washington.
A vote on the package is expected in the House of Representatives on Monday, with the Senate potentially voting on Wednesday.A vote on the package is expected in the House of Representatives on Monday, with the Senate potentially voting on Wednesday.
US presidential hopefuls Barack Obama and John McCain have broadly welcomed an outline of the multi-billion dollar plan to help shore up the US financial system. US presidential candidates Barack Obama and John McCain have broadly welcomed the outline of the multi-billion dollar plan to help shore up the US financial system.
The US administration wants a deal to be announced before markets open in Asia on Monday morning.The US administration wants a deal to be announced before markets open in Asia on Monday morning.
'Necessary step''Necessary step'
Earlier, the Republican candidate for the presidency, Senator John McCain, said that subject to seeing the specifics of the agreement, he hoped to be able to add his support. Earlier Mr McCain, the Republican candidate, said that subject to seeing the specifics of the agreement, he hoped to be able to add his support.
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 Senator Barack Obama
"I'd like to see the details but hopefully yes, and the outlines that I have read of it that this is something that all of us will swallow hard and go forward with. The option of doing nothing is simply not an acceptable option," he told ABC TV."I'd like to see the details but hopefully yes, and the outlines that I have read of it that this is something that all of us will swallow hard and go forward with. The option of doing nothing is simply not an acceptable option," he told ABC TV.
Mr Obama said he had been encouraged by the progress made by members of Congress, but warned it was "the culmination of a sorry period in our history". Mr Obama, the Democratic candidate, said he had been encouraged by the progress made by members of Congress, but warned it was "the culmination of a sorry period in our history".
"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. But this step is necessary," he said."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. But this step is necessary," he said.
Pay-off restrictionsPay-off restrictions
We've made great progress toward a deal which will be effective for all Americans Henry Paulson class="" href="/1/hi/business/7635420.stm">Bail-out debate: For and against class="" href="/1/hi/business/7637365.stm">Deal sticking points class="" href="/1/hi/business/7631321.stm">Q&A: US $700bn bail-out plan We've made great progress toward a deal which will be effective for all Americans Henry Paulson
An outline of the deal - which emerged earlier on Sunday - gives the treasury secretary powers to oversee the two-year plan, but critics have insisted on the inclusion of greater oversight and reporting.An outline of the deal - which emerged earlier on Sunday - gives the treasury secretary powers to oversee the two-year plan, but critics have insisted on the inclusion of greater oversight and reporting.
The BBC's Justin Webb in Washington says the tentative agreement that appears to have been reached is thought to include a measure to limit the pay for executives of companies which seek financial assistance, which was a key demand of the Democrats. The BBC's Justin Webb in Washington says the agreement that appears to have been reached is thought to include a measure to limit the pay for executives of companies which seek financial assistance, which was a key demand of the Democrats.
At the request of Republicans, who have strongly criticised some elements of the administration's proposal, the accord is believed to include the setting up an insurance program for mortgage-backed securities. At the request of Republicans, who have strongly criticised some elements of the administration's proposal, the accord is believed to include the setting up of an insurance program for mortgage-backed securities.
Earlier, a statement from the House of Representatives Speaker, Democrat Nancy Pelosi, said the new agreement would see $250bn issued immediately, and another $100bn when the president wanted to spend it. Earlier, a statement from the Speaker of the House of Representatives , Democrat Nancy Pelosi, said the new agreement would see $250bn issued immediately, and another $100bn when the president wanted to spend it.
US House of Representatives speaker Nancy PelosiUS House of Representatives speaker Nancy Pelosi
But the final $350bn would only be released after review and approval by Congress.But the final $350bn would only be released after review and approval by Congress.
There would also be measures to protect taxpayers, who would be given an ownership stake and profit-making opportunities in relation to any assets that were sold.There would also be measures to protect taxpayers, who would be given an ownership stake and profit-making opportunities in relation to any assets that were sold.
It also puts new restrictions on executive compensation for participating companies, including no "golden parachute" payoffs.It also puts new restrictions on executive compensation for participating companies, including no "golden parachute" payoffs.
Earlier on Sunday it was announced that the two-year project would be supervised by a board of officials, including the Federal Reserve chairman, and scrutinised by Congress's investigative arm and an independent inspector general.Earlier on Sunday it was announced that the two-year project would be supervised by a board of officials, including the Federal Reserve chairman, and scrutinised by Congress's investigative arm and an independent inspector general.
Finally, the government could use its power as the owner of mortgages and mortgage-backed securities to help more struggling homeowners modify the terms of their home loans.Finally, the government could use its power as the owner of mortgages and mortgage-backed securities to help more struggling homeowners modify the terms of their home loans.
'All night''All night'
US Treasury Secretary Henry Paulson, who took part in the late-night talks, said that Congressional leaders had been "working very hard".US Treasury Secretary Henry Paulson, who took part in the late-night talks, said that Congressional leaders had been "working very hard".
HAVE YOUR SAY NO BAILING OUT! When bankers profit over people the money is theirs only. When bankers lose money the loss is ours. Jon Huhm, Manhattan, New York Send us your commentsHAVE YOUR SAY NO BAILING OUT! When bankers profit over people the money is theirs only. When bankers lose money the loss is ours. Jon Huhm, Manhattan, New York Send us your comments
"We've made great progress toward a deal, which will work and will be effective in the marketplace, and effective for all Americans," he told a news conference."We've made great progress toward a deal, which will work and will be effective in the marketplace, and effective for all Americans," he told a news conference.
But Ms Pelosi said the deal had to be committed to paper before it could be formally agreed.But Ms Pelosi said the deal had to be committed to paper before it could be formally agreed.