WASHINGTON — After a tumultuous week of round-the-clock negotiations, Congress prepared Sunday for a difficult House vote today on a sweeping $700-billion Wall Street rescue plan to stave off a possible global financial meltdown.
Racing a self-imposed 6 p.m. deadline Sunday ahead of the opening of Asian financial markets, bleary-eyed Democrats in control of Congress released the text of the Emergency Economic Stabilization Act of 2008 after agreement was reached Sunday. The plan has GOP support in the Senate, where a vote is expected as soon as Wednesday, but substantially less Republican support in the House.
Democratic and Republican leaders worked through the night over the weekend to modify a plan put forth by Treasury Secretary Henry Paulson to remove distressed mortgages and similar toxic assets off the books of banks and other financial firms. Paulson had warned that credit markets are on the verge of seizing up, with grave consequences for consumer lending of all sorts.
"I am confident this legislation gives us the flexibility to unclog our financial markets and increase the ability of our financial institutions to deliver the credit that will help create jobs," Paulson said in a statement that praised lawmakers for their tough decision. "We are taking the steps needed to be ready to begin implementing this legislation as soon as it is signed."
President Bush said in a statement Sunday night, "This plan sends a strong signal to markets around the world that the United States is serious about restoring confidence and stability to our financial system."
In detailing legislation that grew to more than 100 pages from its original three, lawmakers chose their words carefully Sunday to let angry American voters know they'd been heard.
"It's very clear that Americans have some reason to be concerned, even angry about where we find ourselves. We know there has been greed on Wall Street," said Senate Majority Leader Harry Reid, D-Nev.
But the cost of doing nothing was greater than what is being proposed, he said.
"Inaction would paralyze our economy; even now it is difficult for people to get a car loan," Reid said, adding that "the market is frozen in terms of buying homes in many parts of our country."
House Speaker Nancy Pelosi, D-Calif., sought to assure Americans that their tax dollars weren't rescuing the well-heeled on Wall Street.
"People have to know this is not a bailout of Wall Street, it's a buy-in," said Pelosi, touting taxpayer protections and an effort to limit the compensation of some Wall Street executives who might partake in the rescue effort.
One of the lead GOP negotiators, New Hampshire Sen. Judd Gregg, said he was confident the measure would attract enough members of his party in both chambers of Congress to pass.
"I think everybody got what they needed to have," he said.
Members of both parties supported measures to prevent golden parachutes when a Wall Street executive departs. If a company has had government intervention, the five highest-ranking officials in that company will be denied bonus and incentive pay.
Lawmakers quickly published a copy of the deal online (house.gov/apps/list/press/financialsvcs_dem/press092808.shtml), giving a wary American public a look at the compromise ahead of a congressional vote. But servers crashed under the weight of so many requests to access the site.
Federal Reserve Chairman Ben Bernanke and Paulson have warned repeatedly that absent an urgent response, credit markets could collapse this week, punishing Wall Street and Main Street alike.
"The deal should go a long way to stabilizing financial markets and putting the financial system on what will be a long road to recovery," said Mark Zandi, chief economist of economic forecaster Moody's Economy.com.
The rescue effort won't fix all that is wrong with the slumping U.S. economy, but it seeks to keep things from getting worse fast.
"It's mostly is a stop-gap to get through the election and let the next president deal with it," said David Wyss, chief economist for rating agency Standard & Poor's in New York. "You've got to get the housing market stabilized and manage to get the economy growing. This makes it more likely that it will be a mild recession, not a deep recession."
The agreement was greeted with subdued optimism in early Asian trading today. Tokyo's benchmark Nikkei 225 index was up 0.46 percent at 11,947.65, but gains were limited by doubts over the effectiveness of the plan and lingering concerns about a global economic slowdown.
Hong Kong's Hang Seng index fell 2 percent while South Korea's Kospi lost 0.8 percent.
Information from the New York Times was used in this report.