Day 15 – “Fears emerge over $700bn rescue : The dollar buckled, stocks tumbled and the price of oil jumped” – FT
Here is a screen grab that I got during my late lunch Pacific Time:
Now here are links and items from three articles which were not picked as the top news item of the moment during Day 15 following the Fannie and Freddie bailout:
Here is the second article to get snubbed for headline status:
Starting a New Era at Goldman and Morgan
The transformation of Wall Street picked up pace on Monday as Goldman Sachs and Morgan Stanley, the last big independent investment banks, moved to restructure into larger, less risk-taking organizations that will be subject to far greater regulation by the Federal Reserve.
Investment banking dies on Wall Street! How quickly it gets brushed aside by more important matters–like bailing out capitalism.
Now here is the third:
Crude Oil Prices Up More Than $16
By 11:00pm Pacific time the headline changed to this:
Oil price jumps $25 in a day
Crude oil prices jumped $25 a barrel on Monday – the largest one-day rise – as financial investors betting on falling oil prices were forced to cover their positions ahead of the expiry of the current benchmark futures contract.
The jump to an intraday high of $130 a barrel – a rise of about $40 a barrel from last week’s low – was exacerbated by a weakening US dollar and data showing weaker supplies from Mexico, Nigeria and Saudi Arabia in recent weeks and surging imports by China.
Here is fourth article that the New York Times was not covering at the time because there was a big fire in DC to put out and details of other business had been obscured:
Freddie and Fannie bank losses grow
US regulators have underestimated potential bank losses on preferred stock issued by Fannie Mae and Freddie Mac, the American Bankers Association said on Monday.
Nearly a third of US banks hold preferred stock issued by the two mortgage financiers that were taken into conservatorship this month, according to an industry survey conducted by the ABA. The average bank exposure to such securities relative to core equity capital was 11 per cent.
“The negative impact on banks – particularly Main Street community banks – is far greater than regulators first thought,” wrote Edward Yingling, chief executive of the ABA in a letter to the Treasury, the Federal Reserve and other banking regulators.
The government takeover of Fannie and Freddie all but wiped out the value of $36bn of their preferred shares. This would force exposed banks to take writedowns at the end of the third quarter that could impede future lending, the ABA warned.
“When the actions were contemplated to reduce dividends on Fannie Mae and Freddie Mac preferred stock, the bank regulators estimated that only a dozen banks would be affected by it,” Mr Yingling said.
Regulators said this month only a small handful of banks had “significant” holdings in Fannie Mae and Freddie Mac relative to their capital bases and that they would help develop plans to restore capital at these banks.
However, the ABA survey suggests the impact of writedowns could be more widespread and more severe than regulators initially indicated, particularly among small community banks that engage in lending for small and medium-sized local businesses.
The ABA’s letter called for regulators to reconsider the suspension of dividend payments on Fannie and Freddie preferred stock to alleviate the capital impact on banks and avoid a multi-billion dollar decline in lending.
The fact that none of these got top billing emphasizes the importance of the rest of this post. This previous article should be read by George W. Bush himself so that he cools his heels on pushing haste on the process of Congress to approve his legislation proposal-which he asked zero questions about when he approved the action on Thursday. Here is a graphic that appeared with the headline lunch time article as Congress negotiated amendments to the Executive branches 3 page bailout proposal:
Highlights from that afternoon article:
Stocks Fall as Rescue Plan Is Negotiated
New York Times
By DAVID M. HERSZENHORNThis article was reported by David M. Herszenhorn, Stephen Labaton and Mark Landler, and written by Mr. Herszenhorn.
…Democrats are bracing for a battle over efforts to limit the pay of executives whose firms seek help and over whether to grant bankruptcy judges authority to modify the mortgages of borrowers in danger of foreclosure…
…epresentative Barney Frank, Democrat of Massachusetts and chairman of the House Financial Services Committee, said he had reached a general agreement with the Treasury Department over mortgage aid and Congressional oversight.
But Mr. Bush may find that members of his own party are among the holdouts…
…The Senate Democrats’ proposals includes two bold provisions. One would grant the Treasury “contingent shares” of stock in any financial institution that wants to sell bad debt to the government; the other would grant bankruptcy judges the authority to modify the terms of primary mortgages, a step aimed at helping homeowners at risk of foreclosure.
The bankruptcy provision is staunchly opposed by the banking, lending and securities industries and by many Republicans in Congress, but Democrats insist that it is one of the few mechanisms to provide direct assistance to homeowners caught in the foreclosure crisis.
The contingent shares would give taxpayers an equity stake in companies seeking help through the rescue program, potentially allowing the government not only to recoup however much of the $700 billion it spends on bad debt, but also to profit should the financial firms prosper in years ahead. The legislation would require the value of the contingent shares to equal the value of the assets purchased by the government.
The 44-page Senate proposal, pulled together by Senator Christopher J. Dodd, Democrat of Connecticut and the chairman of the banking committee, would require the Treasury to run the rescue plan through a new “Office of Financial Stability” to be headed by an assistant treasury secretary. It would also establish an “Emergency Oversight Board” to monitor the bailout effort, made up of the Fed Chairman; the chairman of the Federal Deposit Insurance Corporation; the chairman of the Securities and Exchange Commission; and two non-government employees with “financial expertise” in the public and private sectors, one each appointed by the majority and minority leadership in Congress…
…In addition, the Senate proposal would require monthly reports to Congress, rather than the biannual reports that would be required under the Bush administration’s proposal…
The Bush administration’s proposal could prove to be the largest government bailout of private industry in the nation’s history. It calls for nearly unfettered powers for the Treasury secretary in managing the bailout.
Though the jittery state of the financial markets put pressure on officials and legislators to move quickly, some lawmakers said they did not want to be rushed into approving extraordinary new powers for the Treasury secretary and the government without full consideration of the consequences…
Financial companies were already lobbying to broaden the plan. And the Bush administration did indeed widen the scope by allowing the government to buy out assets other than mortgage-related securities as well as making foreign companies eligible for government assistance.
“We will not simply hand over a $700 billion blank check to Wall Street and hope for a better outcome,” House Speaker Nancy Pelosi said.
Top administration officials and senior lawmakers said that the markets could be devastated if Congress and the administration failed to reach agreement on the plan.
Mr. Paulson said he hoped that the government would recoup much of the cost of buying distressed mortgage-related assets. But he did not rule out that the initial cost of the bailout could rise beyond $700 billion, the limit set in the terse proposal sent by the Treasury to Congress on Saturday.
“That doesn’t mean we’ll go all the way there, or it doesn’t mean it will stop there and we won’t ask for more,” Mr. Paulson said Sunday on the CBS program, “Face the Nation.” “What we need is something that is big enough to get the job done. We’ll ask for what we think is a right amount to give us plenty of flexibility.”
Now here are the highlights from the evening article which was written by the same author as the first article (good days work sir!):
Stocks Fall as Rescue Plan Is Negotiated
By DAVID M. HERSZENHORN
…lawmakers in both parties voiced anger over the steep cost and even skepticism about the plan’s chances of success…
Congressional leaders and Treasury officials also said they were close to an agreement over a proposal by some Democrats in which taxpayers could receive an ownership stake, in the form of warrants to buy stock, from firms seeking to sell distressed debt.
Lawmakers want to require an equity stake, while the administration wants flexibility on that matter, a Treasury official said…
“I am concerned that Treasury’s proposal is neither workable nor comprehensive despite its enormous price tag,” Senator Richard C. Shelby of Alabama, the senior Republican on the banking committee, said in a statement. “It would be foolish to waste massive sums of taxpayer funds testing an idea that has been hastily crafted.”
While Congressional leaders in both chambers said they were confident that they could reach a quick deal, it was also clear that Mr. Paulson and Mr. Bernanke would face rough questioning and that initial support for the bailout had begun to fray. Some Democrats said they simply did not trust the president, and drew a parallel to Mr. Bush’s request for authority to wage war in Iraq.
President Bush urged Congress on Monday to act fast. “Americans are watching to see if Democrats and Republicans, the Congress and the White House, can come together to solve this problem with the urgency it warrants,” he said in a statement. “The whole world is watching to see if we can act quickly to shore up our markets.”
The majority leader, Senator Harry Reid of Nevada, said Democrats were prepared to do so. “Democrats in the Senate aren’t going to drag our feet,” he said in a speech on the Senate floor. “We’ll respond with the urgency of action that this situation demands, but after eight years of fiscal dereliction of duty, it’s time for accountability.”
“Should we resolve the issue in one day?” he asked. “I think not.”
Republican leaders who support the administration’s plan warned the Democrats on Monday to exercise restraint and not slow the bailout package, even as they prepared for an aggressive internal campaign to rally Republican support.
“When there’s a fire in your kitchen threatening to burn down your home, you don’t want someone stopping the firefighters on the way and demanding they hand out smoke detectors first or lecturing you about the hazards of keeping paint in the basement,” Senator Mitch McConnell of Kentucky, the Republican leader, said in a speech on the Senate floor. “You want them to put out the fire before it burns down your home and everything you’ve saved for your whole life.”
Mr. McConnell added: “The same is true of our current economic situation. We know that there is a serious threat to our economy, and we know that we must take action to try and head off a serious blow to Main Street.”
“I walked down LaSalle Street on Friday, a great street in Chicago lined with banks and big office buildings,” said Senator Richard J. Durbin of Illinois, the No. 2 Democrat. “A lot of people came up and said ‘hi.’ But a lot of them came up and said: ‘Are you really going to do this? $700 billion bailing out the banks? And I said: ‘I don’t know. At the end of the day, I just don’t know.’ ”
Mr. Durbin, in a speech on the Senate floor, angrily recalled that the administration had similarly requested swift approval of its plan to attack Iraq. “Just as we should have asked more questions about weapons of mass destruction six years ago before we found ourselves in this war,” Mr. Durbin said, “we need to ask questions today about where this is leading.”
Representative Henry A. Waxman, Democrat of California who leads the Oversight and Government Reform Committee, said: “The taxpayer is being asked to risk billions to protect the bonuses of investment bankers.”
The skepticism was equally palpable at the other end of the ideological spectrum.
“This is going way too fast,” said Representative Mike Pence, Republican of Indiana and a conservative leader who said constituents he met this weekend were flabbergasted at the plan. “The American people don’t want Congress to make haste with the financial recovery legislation; they want us to make sense.”
And Mr. Shelby, of the banking committee, said: “Congress must immediately undertake a comprehensive, public examination of the problem and alternative solutions rather than swiftly pass the current plan with minimal changes or discussion. We owe the American taxpayer no less.”…
…In a sign of how complicated the negotiations over specific provisions of the bailout could become, Senator Mel Martinez, Republican of Florida, and a member of the banking committee, said that he would strongly support limiting the pay of executives whose firms seek government aid. But Mr. Martinez said he would oppose any effort to change the bankruptcy laws.
In his prepared testimony, Mr. Paulson sought to underscore the huge risks to everyday Americans. “The market turmoil we are experiencing today poses great risk to U.S. taxpayers,” Mr. Paulson plans to testify. “When the financial system doesn’t work as it should, Americans’ personal savings, and the ability of consumers and business to finance spending, investment and job creation are threatened.”
Mr. Bernanke, in his remarks, will implore the Congress to act. “Despite the efforts of the Federal Reserve, the Treasury and other agencies, global financial markets remain under extraordinary stress,” he says in his remarks. “Action by the Congress is urgently required to stabilize the situation and avert what otherwise could be very serious consequences for our financial markets and for our economy.”…
Officials said there was also a deal to mandate that the government develop a plan to prevent foreclosures by renegotiating any mortgages that it purchases.
Because the markets are eager for a final deal and because Congress is trying to adjourn for the fall elections, lawmakers are bypassing the normal committee process and working toward an agreement in hopes of votes in both chambers within days.
And some lawmakers said it could be done. “We are convinced that inaction could be a disaster,” said Senator Robert Bennett, Republican of Utah. “We don’t believe that inaction is an option, so therefore we are going to do whatever we can to make sure that the action that is taken is as responsible and well thought-out as possible.”
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Full Articles
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Stocks Fall as Rescue Plan Is Negotiated
New York Times
September 23, 2008
By DAVID M. HERSZENHORNThis article was reported by David M. Herszenhorn, Stephen Labaton and Mark Landler, and written by Mr. Herszenhorn.
WASHINGTON — Senate and House Democratic leaders said on Monday that they had reached an agreement on their conditions for approving a $700 billion rescue plan for the financial system, including more oversight of the program and a requirement that the government do more to help troubled borrowers refinance their mortgages.
But even as Congressional Democrats and the administration began to narrow their differences, Democrats are bracing for a battle over efforts to limit the pay of executives whose firms seek help and over whether to grant bankruptcy judges authority to modify the mortgages of borrowers in danger of foreclosure.
Investors were skeptical. Concerns that the bailout plan may not move smoothly through Congress contributed to the anxiety in the markets that pushed the Dow Jones industrial average down more than 372 points and pushed crude oil up more than $16 a barrel.
President Bush on Monday morning urged legislators to resist the temptation to add provisions that, he said, “would undermine the effectiveness of the plan.” Still, Treasury officials indicated a willingness to negotiate.
Within hours, Representative Barney Frank, Democrat of Massachusetts and chairman of the House Financial Services Committee, said he had reached a general agreement with the Treasury Department over mortgage aid and Congressional oversight.
But Mr. Bush may find that members of his own party are among the holdouts. Some conservative Republicans criticized the plan, raising the stakes for Treasury Secretary Henry M. Paulson Jr., who has been trying to persuade lawmakers and an increasingly frustrated American public that the rescue package was needed.
Newt Gingrich, the former House speaker, said he expected Republican lawmakers to oppose the plan in increasing numbers. “I think this is going to be a much bigger fight than he expected,” Mr. Gingrich said, referring to President Bush, who called again for swift action on Monday morning. “I think this bill is a long way from done,” Mr. Gingrich added.
Republican leaders who support the administration’s plan warned Democrats on Monday to exercise restraint and not slow the bailout package, even as they prepared for an aggressive internal campaign to rally Republican support.
“When there’s a fire in your kitchen threatening to burn down your home, you don’t want someone stopping the firefighters on the way and demanding they hand out smoke detectors first or lecturing you about the hazards of keeping paint in the basement,” Senator Mitch McConnell of Kentucky, the Republican leader, said in a speech on the Senate floor. “You want them to put out the fire before it burns down your home and everything you’ve saved for your whole life.”
Mr. McConnell added: “The same is true of our current economic situation. We know that there is a serious threat to our economy, and we know that we must take action to try and head off a serious blow to Main Street.”
The Senate Democrats’ proposals includes two bold provisions. One would grant the Treasury “contingent shares” of stock in any financial institution that wants to sell bad debt to the government; the other would grant bankruptcy judges the authority to modify the terms of primary mortgages, a step aimed at helping homeowners at risk of foreclosure.
The bankruptcy provision is staunchly opposed by the banking, lending and securities industries and by many Republicans in Congress, but Democrats insist that it is one of the few mechanisms to provide direct assistance to homeowners caught in the foreclosure crisis.
The contingent shares would give taxpayers an equity stake in companies seeking help through the rescue program, potentially allowing the government not only to recoup however much of the $700 billion it spends on bad debt, but also to profit should the financial firms prosper in years ahead. The legislation would require the value of the contingent shares to equal the value of the assets purchased by the government.
The 44-page Senate proposal, pulled together by Senator Christopher J. Dodd, Democrat of Connecticut and the chairman of the banking committee, would require the Treasury to run the rescue plan through a new “Office of Financial Stability” to be headed by an assistant treasury secretary. It would also establish an “Emergency Oversight Board” to monitor the bailout effort, made up of the Fed Chairman; the chairman of the Federal Deposit Insurance Corporation; the chairman of the Securities and Exchange Commission; and two non-government employees with “financial expertise” in the public and private sectors, one each appointed by the majority and minority leadership in Congress.
In addition, the Senate proposal would require monthly reports to Congress, rather than the biannual reports that would be required under the Bush administration’s proposal.
Amid continuing concerns over the deep global ramifications of the crisis, the finance ministers and central bank governors of the Group of Seven major industrial nations said on Monday that they were maintaining “heightened close cooperation.” In a joint statement, they pledged to take “whatever actions may be necessary, individually and collectively, to ensure the stability of the international financial system.”
The ministers and governors welcomed the “extraordinary” actions proposed by American officials to take illiquid assets off bank balance sheets, Reuters reported. But the statement made no other mention of any specific steps to be taken by the group’s member nations.
The Bush administration’s proposal could prove to be the largest government bailout of private industry in the nation’s history. It calls for nearly unfettered powers for the Treasury secretary in managing the bailout.
Though the jittery state of the financial markets put pressure on officials and legislators to move quickly, some lawmakers said they did not want to be rushed into approving extraordinary new powers for the Treasury secretary and the government without full consideration of the consequences.
Both presidential nominees, who face the prospect of inheriting an enormous program, said there had to be more oversight of the Treasury Department than the Bush administration had proposed.
Financial companies were already lobbying to broaden the plan. And the Bush administration did indeed widen the scope by allowing the government to buy out assets other than mortgage-related securities as well as making foreign companies eligible for government assistance.
Banks and traders also braced themselves for another tumultuous week in the markets. But early signs indicate that investors in Asia were reacting positively to the developments in Washington. Meanwhile, top Democrats and Republicans on Capitol Hill said on Sunday that they would act swiftly on the administration’s request, but not without setting their own conditions.
“We will not simply hand over a $700 billion blank check to Wall Street and hope for a better outcome,” House Speaker Nancy Pelosi said.
Top administration officials and senior lawmakers said that the markets could be devastated if Congress and the administration failed to reach agreement on the plan.
Mr. Paulson said he hoped that the government would recoup much of the cost of buying distressed mortgage-related assets. But he did not rule out that the initial cost of the bailout could rise beyond $700 billion, the limit set in the terse proposal sent by the Treasury to Congress on Saturday.
“That doesn’t mean we’ll go all the way there, or it doesn’t mean it will stop there and we won’t ask for more,” Mr. Paulson said Sunday on the CBS program, “Face the Nation.” “What we need is something that is big enough to get the job done. We’ll ask for what we think is a right amount to give us plenty of flexibility.”
*****
Bailout Plan Talks Advance in Congress
New York Times
By DAVID M. HERSZENHORNWASHINGTON — The Bush administration and Congressional leaders moved closer to agreement on a historic $700 billion bailout for financial firms on Monday, including tight oversight of the program and new efforts to help homeowners at risk of foreclosure.
But lawmakers in both parties voiced anger over the steep cost and even skepticism about the plan’s chances of success.
As heated debate began on Capitol Hill, Congress and the administration remained at odds over the demands of some lawmakers, including limits on the pay of top executives whose firms seek help, and new authority to allow bankruptcy judges to reduce mortgage payments for borrowers facing foreclosure.
Congressional leaders and Treasury officials also said they were close to an agreement over a proposal by some Democrats in which taxpayers could receive an ownership stake, in the form of warrants to buy stock, from firms seeking to sell distressed debt.
Lawmakers want to require an equity stake, while the administration wants flexibility on that matter, a Treasury official said.
Despite the progress, the rancor in Congress ratcheted up the pressure on Treasury Secretary Henry M. Paulson Jr. and Federal Reserve Chairman Ben S. Bernanke, the architects of the proposal to let financial institutions, including some foreign firms, pass their most distressed assets to the United States Treasury.
Both are scheduled to testify before the Senate banking committee on Tuesday morning, where they must now sell the bailout plan to dubious lawmakers and to an increasingly angry public. They will also appear before the House Financial Services committee on Wednesday afternoon.
“I am concerned that Treasury’s proposal is neither workable nor comprehensive despite its enormous price tag,” Senator Richard C. Shelby of Alabama, the senior Republican on the banking committee, said in a statement. “It would be foolish to waste massive sums of taxpayer funds testing an idea that has been hastily crafted.”
While Congressional leaders in both chambers said they were confident that they could reach a quick deal, it was also clear that Mr. Paulson and Mr. Bernanke would face rough questioning and that initial support for the bailout had begun to fray. Some Democrats said they simply did not trust the president, and drew a parallel to Mr. Bush’s request for authority to wage war in Iraq.
Some conservative Republicans also expressed outrage, echoing scornful comments by Newt Gingrich, the former House speaker, and Lou Dobbs, the CNN anchor, among other right-leaning critics.
Treasury officials brushed off the protests from influential Republicans like Mr. Shelby and said they were confident that Republican leaders could bring their members along. “We are making progress and have confidence that a plan will pass by the end of this week,” said Michele Davis, a spokeswoman for Mr. Paulson.
The financial markets, however, reacted badly to the wrangling in Washington, with the Dow Jones industrial average tumbling 372 points.
President Bush urged Congress on Monday to act fast. “Americans are watching to see if Democrats and Republicans, the Congress and the White House, can come together to solve this problem with the urgency it warrants,” he said in a statement. “The whole world is watching to see if we can act quickly to shore up our markets.”
The majority leader, Senator Harry Reid of Nevada, said Democrats were prepared to do so. “Democrats in the Senate aren’t going to drag our feet,” he said in a speech on the Senate floor. “We’ll respond with the urgency of action that this situation demands, but after eight years of fiscal dereliction of duty, it’s time for accountability.”
“Should we resolve the issue in one day?” he asked. “I think not.”
Republican leaders who support the administration’s plan warned the Democrats on Monday to exercise restraint and not slow the bailout package, even as they prepared for an aggressive internal campaign to rally Republican support.
“When there’s a fire in your kitchen threatening to burn down your home, you don’t want someone stopping the firefighters on the way and demanding they hand out smoke detectors first or lecturing you about the hazards of keeping paint in the basement,” Senator Mitch McConnell of Kentucky, the Republican leader, said in a speech on the Senate floor. “You want them to put out the fire before it burns down your home and everything you’ve saved for your whole life.”
Mr. McConnell added: “The same is true of our current economic situation. We know that there is a serious threat to our economy, and we know that we must take action to try and head off a serious blow to Main Street.”
House Speaker Nancy Pelosi, after a meeting with party leaders on Monday evening, said she, too, remained committed to getting a bill to the president as quickly as possible.
But powerful lawmakers in both parties said they would not be rushed into granting Mr. Bush’s request.
“I walked down LaSalle Street on Friday, a great street in Chicago lined with banks and big office buildings,” said Senator Richard J. Durbin of Illinois, the No. 2 Democrat. “A lot of people came up and said ‘hi.’ But a lot of them came up and said: ‘Are you really going to do this? $700 billion bailing out the banks? And I said: ‘I don’t know. At the end of the day, I just don’t know.’ ”
Mr. Durbin, in a speech on the Senate floor, angrily recalled that the administration had similarly requested swift approval of its plan to attack Iraq. “Just as we should have asked more questions about weapons of mass destruction six years ago before we found ourselves in this war,” Mr. Durbin said, “we need to ask questions today about where this is leading.”
Representative Henry A. Waxman, Democrat of California who leads the Oversight and Government Reform Committee, said: “The taxpayer is being asked to risk billions to protect the bonuses of investment bankers.”
The skepticism was equally palpable at the other end of the ideological spectrum.
“This is going way too fast,” said Representative Mike Pence, Republican of Indiana and a conservative leader who said constituents he met this weekend were flabbergasted at the plan. “The American people don’t want Congress to make haste with the financial recovery legislation; they want us to make sense.”
And Mr. Shelby, of the banking committee, said: “Congress must immediately undertake a comprehensive, public examination of the problem and alternative solutions rather than swiftly pass the current plan with minimal changes or discussion. We owe the American taxpayer no less.”
Mr. Gingrich, the former House speaker, said he expected Republican lawmakers to oppose the plan in increasing numbers. “I think this is going to be a much bigger fight than he expected,” Mr. Gingrich said, referring to President Bush.
In a sign of how complicated the negotiations over specific provisions of the bailout could become, Senator Mel Martinez, Republican of Florida, and a member of the banking committee, said that he would strongly support limiting the pay of executives whose firms seek government aid. But Mr. Martinez said he would oppose any effort to change the bankruptcy laws.
In his prepared testimony, Mr. Paulson sought to underscore the huge risks to everyday Americans. “The market turmoil we are experiencing today poses great risk to U.S. taxpayers,” Mr. Paulson plans to testify. “When the financial system doesn’t work as it should, Americans’ personal savings, and the ability of consumers and business to finance spending, investment and job creation are threatened.”
Mr. Bernanke, in his remarks, will implore the Congress to act. “Despite the efforts of the Federal Reserve, the Treasury and other agencies, global financial markets remain under extraordinary stress,” he says in his remarks. “Action by the Congress is urgently required to stabilize the situation and avert what otherwise could be very serious consequences for our financial markets and for our economy.”
Early on Monday, Senator Christopher J. Dodd, Democrat of Connecticut, and chairman of the banking committee, introduced a 44-page draft bill that his staff pulled together on Sunday incorporating many priorities of Senate Democrats — a hefty counterproposal to the administration’s initial three page proposal.
Representative Barney Frank, Democrat of Massachusetts, and chairman of the Financial Services Committee, who had already submitted a series of demands to the Treasury, worked Monday to revise his version of the legislation to reflect various agreements with the administration on oversight and other issues.
Officials said that the administration was also prepared to adopt conflict-of-interest rules for any private firms that are hired to help the Treasury manage the bailout program. Some lawmakers were worried that such firms might also own assets that could grow in value depending on how the rescue plan was run.
Officials said there was also a deal to mandate that the government develop a plan to prevent foreclosures by renegotiating any mortgages that it purchases.
Because the markets are eager for a final deal and because Congress is trying to adjourn for the fall elections, lawmakers are bypassing the normal committee process and working toward an agreement in hopes of votes in both chambers within days.
And some lawmakers said it could be done. “We are convinced that inaction could be a disaster,” said Senator Robert Bennett, Republican of Utah. “We don’t believe that inaction is an option, so therefore we are going to do whatever we can to make sure that the action that is taken is as responsible and well thought-out as possible.”