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FINANCIAL BAILOUT IN U.S. - Likely, But Not Without Wrangling!


A dramatic week on Wall Street moves to the next level this week, as the Federal Government is asking the U.S. Congress for the authority to purchase hundreds of billions of dollars of troubled mortgage loan funds from lenders drowning in mortgage loan defaults and foreclosures.  Presumably, these bundles of debt would be eventually resold to investors, to recoup much, if not all, of the Fed investment.

But will it work?  And will it pass both houses of Congress addressing the desires of many legislators that the bill contain provisions to help currently-troubled homeowners facing foreclosure?  Or, that it add a provision for a further economic stimulus to spur the general economy?  Or, that a cap be placed on how much executives on troubled institutions can earn if they quit in the light of our recent financial turmoil?

This week will tell the beginning of the story - weeks and months, perhaps even years, will have to go by to see if the bailout will truly work.

There is no doubt that the bailout needs to go through - Democrats and Republicans agree on this basic premise.  But "the devil will be in the details" this week, as Congress considers considers bailout authority that can exceed the cost of the entire Iraq War to date.  The war's current price tag, so far - $600 Billion.

The measure would also raise the Federal Debt Ceiling to a staggering $11.3 Trillion (that's $11,600,000,000,000!).  The Housing Relief Act passed last summer raised that ceiling to $10.6 Billion.  The proposed ceiling would represent a 17.7% increase over the current $9.6 Billion National Debt.

Most political observers also expect the blame game to accelerate, on both sides of the aisle, if one party attempts to attach too many revisions to the bailout program, possibly delaying it.  Or, if Congress attempts to ramrod the measure through without addressing key concerns involving homeowners currently in trouble, or without regard for the long-term economic and inflationary ramifications of passing the bailout, as well as raising the U.S. Debt Ceiling.

Said Chris Dodd (D-CT), Chairman of the Senate Banking Committee, "This is not in anyway to deprive [Treasury Secretary Henry Paulson] the opportunity to act. We totally understand the gravity of the moment."   But, he added, "You cannot just turn over $700 billion of taxpayer money and not insist that that taxpayer is going to be protected in this."

We reviewed several stories posted online in researching today's important post.  Read extensive coverage in today's Online Wall Street Journal, in a story by Greg Hitt, Damian Paletta, and Deborah Solomon.  Mark Silva of the Chicago Tribune writes a detailed post today in The Swamp blog as well. 

These publications, as well as all of the major business magazines and blog sites, have devoted extensive space and analysis to the current U.S. Financial Crisis - link to them through these stories.


Posted: Sunday, September 21, 2008 7:18 PM by Dean's Team

Comments said:

Good Morning! A historic, turbulent week on Wall Street now leads to debate in the U.S. Congress on the

# September 21, 2008 10:40 PM
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