Financial Reform Watch

Congress Works Around the Clock on Financial Rescue

Between the bookends of last night's presidential debate and tomorrow's 4:15 p.m. kickoff of the Redskins-Cowboys game, official Washington is working hard to reach a compromise financial rescue plan. Staff members from both parties and both Houses of Congress met into the wee hours of the morning today on the legislation. Leaders hope to announce a plan on Sunday before the Asian markets open for their Monday sessions. Votes in the House and Senate are currently planned for Monday.

Staff members are meeting as this is written. The lead negotiators on the package are expected to meet this afternoon to review staff progress. As we noted in our final update yesterday, negotiators appear ready to graft onto the package a proposal from the House GOP to allow Treasury the option to develop an insurance program to support mortgage backed securities. Given Secretary Paulson's earlier comments that an insurance program would not be adequate to address the problems in the marketplace, it is unlikely he would use this option. However, including it in the plan provides a fig leaf to those who indicated they would try to block the plan that appeared headed for enactment before Thursday's White House meeting.

In a statement from the Senate floor this morning, Majority Leader Harry Reid (D-NV) said there are still approximately fifteen issues yet to be resolved. While negotiators have agreed upon most of the broad principles, working out the details has been a challenge. For instance, staff have grappled with how exactly to limit executive compensation and to which executives the limits should apply.

Last night's debate steered clear of controversy over the pending plan. Neither candidate made a strong pitch in favor of the package but both indicated action is important. President Bush continued his efforts to build support for the plan in his radio address to the nation this morning. "I know people are frustrated and this doesn't seem fair, " said the President, but "failure of the financial system would mean hardship for you." He also offered reassurances that the government will likely "recoup much, if not all" of the $700 billion, and he is "confident" we will soon have a bill.

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