Bailout plan may authorize $250B to start, not $700B

A bailout on the installment plan?

The tentative agreement reached in Congress on the $700-billion financial-system bailout plan would authorize $250 billion upfront for the Treasury to use to buy bad loans from banks, the Wall Street Journal and others are reporting.

From the Journal:

Treasury would have access to $250 billion immediately, with another $100 billion to follow if needed. Congress would be able to block the last installment through a vote if it was unhappy with the program.

Financial markets wanted the $700-billion pricetag to show the world that the U.S. was committed to a major cleanup of toxic mortgage paper.

That raises the question of whether a smaller number could spook investors, on fears it might not be enough to end the credit crunch.

So far today the stock market is holding on to its gains, anticipating that Congress will pass the bailout bill. The Dow Jones industrials were up 278 points, or 2.6%, to 11,103 at about 12:25 p.m. PDT.

Comments

[AspenFreePress]

This rancid bailout scheme brings to mind Adolph Hitler's "bailout" of Nazi Germany in the waning days of WWII. Germans wound up taking wheelbarrows full of marks to buy a loaf of bread. And I can already hear the our DC printing presses humming. I imagine FEDs can print $700 billion in less time it takes a metro daily to do a first edition press run. But isn't Bush, the guy who wants the $750 billion for the Wall Street bailout the same guy who hurried us into Iraq?
Sterling Greenwood
Aspen Free Press

[River]

Hank Paulson is NOT telling us the whole truth. Joe "six packs" morgage that was sub prime, is NOT what is killing America's financial markets, but it's what Wall Street did with America's morgages that has burdened America. Wall Street turned America's morgages into highly leveraged debt instruments called CDO's, and it's these CDO's and the debt swaps on these CDO's that has encumbered America.The market for these debt instruments was over $6 trillion/ year. America could easily pull themselves out of this mess if the morgages were $1 to $1 ratio, but Wall Street has leveraged these morgages 200 to 300 to 1 ratio,using CDO's, and along with the debt swaps which are also leveraged, America is now facing an insurmountable mountian to climb. This is the dirty little secret the Uncle Hank doesn't want to tell. It's Wall Street's greed that is killing America not afamily in Ohio or a trucker in Kansas that took out a Sub Prime loan.