Independent UK: US $1 trillion bailout is under threat from political skirmishes

[marmar]

US $1 trillion bailout is under threat from political skirmishes

By Stephen Foley in New York and Margareta Pagano in London
Sunday, 21 September 2008



Cracks are opening up in the remarkable political consensus that allowed the US government to promise a solution to the year-old credit crisis, with Wall Street becoming nervous that partisan battles could delay vital plans to clean up banks' toxic balance sheets.

Less than 48 hours after the Treasury Secretary Hank Paulson called together Congressional leaders from both sides of the aisle, Democrats are demanding that additional measures to boost the economy and prop up house prices be bolted on to legislation aimed at bailing out Wall Street.

Treasury and Congressional aides were huddled together over the weekend to finalise details of a government plan to buy, potentially, hundreds of billions of dollars of distressed mortgage assets – a scheme aimed at clearing out these assets and restoring confidence to the banking system.

Some analysts say the bail-out of the financial system could cost the US government up to $1 trillion, taking a heavy toll on the economy. This includes the rescue of Bear Stearns, Fannie Mae and Freddie Mac, as well as AIG.

Specific legislation will be needed to create a new government agency or government-sponsored vehicle to buy up assets such as collateralised debt obligations (CDOs), whose value has been deteriorating since Americans began defaulting on their loans in record numbers. With the ultimate collateral for these derivatives – US houses – still tumbling in value, there has been no market for the assets for over a year, and the freeze has triggered a chain reaction of disasters in the credit market that reached a crescendo in last week's historic events on the global markets. ......(more)

The complete piece is at: http://www.independent.co.uk/news/business/news/us-1-trillion-bailout-is-under-threat-from-political-skirmishes-936667.html

[msongs]

1. you brits really think we want a coup d'etat in the guise of economic stability? nt

[Democrats_win]

2. GOP propaganda will brow-beat Americans into accepting this piece of sh**.

Open wide.