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Paulson to Congress: Pass bailout ASAP

Treasury Secretary Henry Paulson, Federal Reserve Board Chairman Ben Bernanke, Chairman of the Securities and Exchange Commission Christopher Cox, and director of the Federal Housing Finance Agency James Lockhart III, testify during a hearing before the Senate Banking, Housing and Urban Affairs Committee today.

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TEXT OF STORY

Stacey Vanek-Smith: Treasury Secretary Henry Paulson and Federal Reserve chief Ben Bernanke are on capital hill this morning. They're answering questions about the $700 billion plan to bail out financial markets. But so far, lawmakers don't seem to be convinced. Senate Banking Committee Chairman Christopher Dodd said the money seems to be going to the wrong people.

Christopher Dodd: It would do nothing in my view to help a single family save a home, at least not up front. It would do nothing to stop even a single CEO from dumping billions of dollars of toxic assets on the backs of American taxpayers. But at the same time, do nothing to stop the very authors of this calamity to walk away with bonuses and golden parachutes worth millions of dollars.

But Treasury Secretary Henry Paulson had one message for lawmakers: Get moving already. Paulson said government regulation and other parts of the plan will need further debate, but that lawmakers need to put differences aside and pass the bill ASAP.

Henry Paulson: We must have that critical debate, but we must get through this period first. Right now, all of us are focused on the immediate need to stabilize our financial system. And I believe we share the conviction that this is in the best interests of all Americans. Now let's work together to get it done.

The plan would create a government entity that would buy up hundreds of billions of dollars worth of bad mortgages. Could be hard to rush this plan. Seven hundred billion dollars is a lot of money, after all. And this being Washington, everybody has a pet stipulation. Marketplace's Steve Henn reports.


Steve Henn: In their own bills, lawmakers have pushed to limit CEO compensation, change bankruptcy laws to help homeowners and give tax payers an equity stake in the companies they help. All these provisions make Wall Street bankers a bit uneasy, but Congress has also taken some steps they like. Scott Talbott's a lobbyist for the Financial Services Roundtable.

Scott Talbott: Who can participate and what assets are eligible for purchase by treasury are the heart of the matter and they are still a little bit in flux.

He says one version of the bailout bill allows the feds to buy any troubled assets from banks, not just mortgage loans.

Talbott: Are auto loans included? Are student loans included? Are credit card loans included

Henn: I mean troubled assets seems pretty broad.

Talbott: It is; it is.

Henn: But it's not a done deal.

Talbott: So there is still some uncertainty.

And Talbott and financial markets around the world are listening closely as Bernanke and Paulson and Congress hash out the details and try to end the uncertainty.

In Washington, I'm Steve henn for Marketplace.

About the author

Steve Henn was Marketplace’s technology and innovation reporter for the entire portfolio of Marketplace programs until December 2011.

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Matt Alford's picture
Matt Alford - Sep 23, 2008

The heart of this problem is no one doing their due diligence to be sure home buyers can repay their loans. If banks don't know what their home loans are worth, seems to me they should be renegotiating terms with customers who are at risk. Why does the taxpayer have to fund this activity? The banks didn't do their homework up front, let them do it now on their nickel, not ours.

Maggie McCormick's picture
Maggie McCormick - Sep 23, 2008

Why is profit private and loss public? I'm pretty sure no one needs to be a economics scholar to conclude that the results of capitalism--whether black or red--belong with (and to!) the capitalist. Funny, no one ever tries to spread their profit to the general public.

gb gb's picture
gb gb - Sep 23, 2008

I am disappointed to see the IQ level of financial media being so low.

Let us start with the coverage of Bernanke. He has been saying for past 3 years: 1. there is no problem with derivatives. 2. mortgate lending starndards are fine. Then problems in mortgage industry are contained. Now he is saying that bailout is needed. He has been incompetent in the past. Does his competency change today when he says bailout is needed.

Back in 2003 Warren Buffet told that derivatives are bad. Why didnt Bernanke follow up on that and at least study what Buffet is saying. Obviously he did not. From rate cuts to bailouts, he always does what walstreet wants.

My problem financial media never exposes him for his incompetencies. Fed apart from setting monetery policy is also responsible for setting lending standards. He was asleep at wheel. None in the financial media asks what was FED doing when there were no lending standards at the peak of bubble.

James Wrolstad's picture
James Wrolstad - Sep 23, 2008

I feel absolutely no need to bail out irresponsible and arrogant CEO's. They make the big bucks so let them put in the first $700 billion and then we will talk. I resent these greedy and ignorant "top leaders" from using MY money to bail them out. Stupid is as stupid does and they are the stupidest of the stupid. I dont't give one twit about their survival or their company. They stole from me and all Americans. They are traitors as far as I'm concerned and you know what happens when you sell out America; it's prison and the loss of everything you own. That is fitting for the pain and suffering they are causing Americans and the world. Auto dealers should put up or shut up. Their poor planning does not mean I should bail them out of their myopic hole. I drive gas savers not gas guzzlers. I hope they eat all of their big fat cars and trucks which get 10-12 miles per gallon. Ha, the CEO's can go to prison too for all I care. They have lived lavishly while Americans are suffering from their dumb ideas. NO MONEY FOR THE GREEDY/IGNORANT/SELFISH/ARROGANT CEO'S AND THEIR "MINY-ME" COHORTS! They fouled the nest and now they can live in it. A fifth grader could have planned better than the BIG-MIGHTY CORPORATIONS! WHAT A JOKE!!!!!

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