Bailout agreed ... markets have jumped on news the US Congress has reached agreement on the fundamentals of a rescue plan for the world`s biggest economy.
Bailout talks have stalled after promising start
Political rivals are bickering
Earlier, lawmakers announced a fundamental agreement
TALKS on the historic multi-billion dollar deal to rescue Wall Street and prop up the world`s biggest economy have stalled, just hours after US legislators announced agreement over an in-principle plan.
Negotiations broke down amid bickering between Democrats and Republicans and accusations of political posturing by Republican presidential candidate John McCain.
Earlier today, US lawmakers appeared close to a final agreement on the $US700 billion ($840 billion) bailout to save the US financial system,.
But things spun off course during an emergency White House meeting between Congressional leaders and US President George W. Bush, according to lawmakers.
Before the meeting, which included the two presidential candidates Barack Obama and John McCain, a compromise bipartisan deal seemed imminent.
But afterwards, Congressional leaders said an agreement could take until the weekend.
White House spokeswoman Dana Perino said, "The deal is not finalised ... There`s a commitment to get something done, nobody`s happy about it."
After the meeting Senator Obama said he was confident an agreement would be reached, but was worried political point scoring could slow the process.
"One of the concerns that I have had over the last several days is that when you start to inject presidential politics into delicate negotiations, then you can actually create more problems rather than less,`` he told CNN.
"It is amazing how much you can get done when the cameras are not on and nobody is looking to get credit or allocate blame.``
A late-night discussion held in a bid to get the deal back on track also failed to reach an agreement.
Republican Spencer Bachus, was his party`s sole representative at the late-night talks attended by Treasury Secretary Henry Paulson. Senator Bachus introduced an alternative plan which called for an independent entity to dispose of bad assets, and a cut in capital gains tax.
Talks will resume later tonight (AEST).
Tentative agreement
Earlier, senior US lawmakers announced they had agreed to some fundamental tenants of a rescue plan, but did not fully endorse the proposal to spend $US700 billion buying up toxic mortgage-related securities and sour assets held by banks.
Mr Bush wants to set up a fund to provide banks with the liquidity they need to conduct business. Once markets recover, Treasury could re-sell the bonds and claw back some of the $US700 billion.
American taxpayers are angry that their money will be used to bailout Wall St highflyers, and politicians have called the $US700 billion price tag too high.
The $US700 billion deal would cost every man, woman and child in the United States about $US2300. That is more than the $US506.7 billion total lending by the International Monetary Fund since its post -World War II inception.
The tentative accord agreed to by US lawmakers overnight would give the Bush administration just a fraction of the $US700 billion it had requested up front, with half the money subject to a congressional veto, congressional aides said.
Under the plan, the Treasury secretary would get $US250 billion immediately and could have an additional $US100 billion if he certified it was needed.
The last $US350 billion could be blocked by a vote of Congress under the arrangement, designed to give lawmakers a stronger hand in controlling the unprecedented rescue.
Recession warning
In a televised speech yesterday Mr Bush warned of a possible recession if the rescue plan wasn’t pushed through. He said without the plan more US banks could go broke, retirement nest eggs could be wiped out, house prices could plummet and millions of jobs lost.
The crisis follows a month of turbulence on global share markets, marked by the US government`s takeover of mortgage companies Fannie Mae and Freddie Mac, the bailout of giant insurer American International Group and the bankruptcy of investment bank Lehman Brothers.
Markets rally
Share markets rallied on the news an agreement is near. The Dow Jones Industrial Average rallied 1.82 per cent and the Nasdaq composite jumped 1.43 per cent. The Standard & Poor`s broad-market index rose 1.97 per cent.
Fred Dickson at DA Davidson said the rescue plan could provide a major boost to the economic and market outlook.
“Quick implementation of the rescue program will probably trigger a significant positive reaction in the stock market,`` he said.
“However, investors will probably quickly settle down and realize we still have to deal with a very slow growth economy ... We believe this will be a very slow process which may extend for two to three years or more.”
The news also lifted spirits in Europe, where London`s FTSE index rose 1.99 per cent. In Paris, the CAC 40 gained 2.73 percent while in Frankfurt the Dax added 1.99 per cent.
Bailout agreed ... markets have jumped on news the US Congress has reached agreement on the fundamentals of a rescue plan for the world`s biggest economy.
We're likely to experience the largest institutional shake up in history. Exotic derivatives (CDOs, CLOs, Naked short selling) will become extinct. And for good reason. It's hard to believe that budled packages of debt that became securitised actually made it into the market place. Too much greed. To much insider trading.
Posted by: Bubbles of Bris-vegus 1:53pm today
Naive fools, the lot of us. From 911 > Iraq > The economy. this is all planned and played out perfectly.question:If there was a genuine problem, and you had a 'genuine' solution, and your the president.. your implement your solution immediately. Bush can veto what he wants, bush can send nations to war, bush is the president. There's a reason this bill isnt passing through, thats because people in the house of white DONT WANT it to ,because it means they hold the nation at mercy.Secondly, If indeed Americans do not want their tax dollars going to business execs whom run banks into the grounds through bad practice, theres one simple solution.dont pay taxes, your tax is meant to better your quality of life in your nation. Not to save businessman who fail because of greed.Sadly, its all over. the US is in its death throws, and we, the people sat back knowing it was coming since 2000, and did nothing!See you on the frontlines!
Posted by: Chop of Perth 1:45pm today
You can place the blame wherever you want but the real culprit is the "Federal Reserve Bank". This non-governmental corporation loans worthless printed paper currency to the US Federal Government in exchange for interest and guaranteed by US assets as collateral. How can you pay back $500 when there is only $300 in circulation? You cannot so the lender (the Federal Reserve) now takes possession of the collateral - US sovereignty - conveying financial control to European and other shareholders. Who continues to pay for this con? the American tax payer. This scam masquerading as legitimacy has been going on for decades aided by the controlled mainstream media blackout on the subject. Bush's recent speech cleverly avoids any mention of the Federal Reserve, rather places the blame on "Wall Street", "corporate boobism", etc. If you noticed recent appearances by Bush and Federal Reserve chairman Ben Bernanke excusing away the root cause and offering lame solutions, you cannot help but notice they are visibly pale, clearly shaking in their boots. Why? There is no doubt that the powers behind the throne, the powerful owners of the Federal Reserve, have guns pointed at their temples.
Posted by: Jeremy West of Perth 1:42pm today
Anti Conservative of Perth, you are joking right ? What human rights,the problem with humans is that there are too many rights and not enough responsibilities.
Posted by: Y-gen of down south in the bush 1:41pm today
Mike of Agnes Water, just because something is tangible doesnt mean it is going to go up in value. Have a look online for houses you can buy in the US now for what $350. To me that doesnt seem like a safe haven when it was probably worth 100k 18 months ago. What do you think????
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