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