Lawmakers Near Bailout Deal Economy StumblesBy Reuters - | Posted 2008-09-25 Print
The frenzy of meetings in Washington follows signs of fresh trouble in the world's biggest economy. Orders for U.S. manufactured goods plunged in August, and the number of workers filing new claims for jobless benefits shot up, according to government reports that showed the economy rapidly weakening. Signs of a possible breakthrough on the rescue package, which aims to stave off a widespread financial meltdown, gave beleaguered U.S. stocks a boost.
NEW YORK (Reuters) - U.S. lawmakers neared agreement on a massive Wall Street bailout plan on Thursday with more protections for taxpayers, giving world stock prices a boost even as data showed the U.S. economy slowing.
Lawmakers hope to reach a bipartisan consensus on a proposed $700 billion rescue for U.S. financial firms in time for a meeting at the White House Thursday afternoon.
"The idea of a rescue plan has gotten a public airing. Now it's time for both sides to roll up their sleeves, get together in a room and hash this out once and for all," Charles Schumer, the New York Democrat who chairs the congressional Joint Economic Committee, said in a written statement.
U.S. Treasury Secretary Henry Paulson was expected to work the phones to try to reach a deal with Congress and was closely monitoring the situation in stressed credit markets, where bank-to-bank dollar borrowing rates jumped sharply.
After lawmakers meet behind closed doors, President George W. Bush will bring presidential candidates Barack Obama and John McCain into the negotiations at an emergency White House meeting with Democratic and Republican congressional leaders.
The frenzy of meetings in Washington follows signs of fresh trouble in the world's biggest economy. Orders for U.S. manufactured goods plunged in August, and the number of workers filing new claims for jobless benefits shot up, according to government reports that showed the economy rapidly weakening.
Top U.S. industrial conglomerate General Electric Co (GE.N: Quote, Profile, Research, Stock Buzz) issued a rare profit warning, citing "unprecedented weakness and volatility" in the financial services market.
Central banks have pumped billions of dollars into financial markets to try to ease the credit crunch.
Just weeks before Americans go to the polls to elect their next president, critics have expressed concern that a bailout will let freewheeling bankers get off too lightly, and doubts have surfaced over whether the plan can solve the wider credit crisis.
The Bush administration hopes the bailout can restore liquidity to the market and revive the foundering U.S. economy. The $700 billion would be used to buy up toxic mortgage-related securities held by financial firms. The U.S. housing market slump has sent the value of those securities plummeting.
Treasury spokeswoman Brookly McLaughlin said discussions with lawmakers are "ongoing" and declined to comment on statements from Schumer and House of Representatives Majority Leader Steny Hoyer that a deal could be reached today.
Signs of a possible breakthrough on the rescue package, which aims to stave off a widespread financial meltdown, gave beleaguered U.S. stocks a boost.
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