Morning Brief: Congressional leaders agree to bailout plan

Top Story Chip Somodevilla/Getty Images Following a weekend of tense, high-stakes negotiations, U.S. congressional leaders unveiled an unprecedented $700 billion bailout plan for the financial industry. The resulting 110-page bill (pdf) gives Treasury Secretary Henry Paulson and his successor sweeping authority to purchase a broad array of financial assets. It includes limits on executive pay ...

By , a former managing editor of Foreign Policy.
592322_080929_pelosi5.jpg
592322_080929_pelosi5.jpg

Top Story

Top Story

Chip Somodevilla/Getty Images

Following a weekend of tense, high-stakes negotiations, U.S. congressional leaders unveiled an unprecedented $700 billion bailout plan for the financial industry.

The resulting 110-page bill (pdf) gives Treasury Secretary Henry Paulson and his successor sweeping authority to purchase a broad array of financial assets. It includes limits on executive pay and greater oversight but will not, as Democratic lawmakers hoped, give bankruptcy judges new authority to rewrite mortgages.

In one key change, the federal government will have the power to recoup any losses from the financial industry after five years. But “the Treasury secretary got almost everything he sought” in the end, the Los Angeles Times reports.

“This plan sends a strong signal to markets around the world that the United States is serious about restoring confidence and stability to our financial system,” said President George W. Bush in a statement.

“We sent a message to Wall Street – the party is over,” declared House Speaker Nancy Pelosi. “If we don’t pass it, we shouldn’t be a Congress,” added New Hampshire Republican Sen. Judd Gregg.

But serious opposition remains, especially within the GOP. “Its net effect is still a huge bailout of the financial sector that will snuff out the free market system,” complained Florida Republican Rep. Connie Mack. The House of Representatives votes on it today.

Meanwhile, the financial crisis is rippling through the global economy. European regulators moved to rescue top banks in Britain and Belgium, and IMF Managing Director Dominique Strauss-Kahn is calling for “a global response” to handle the fallout for developing countries. “Laissez-faire is over,” says French President Nicolas Sarkozy.

Decision ’08

Both John McCain and Barack Obama have offered tepid, carefully hedged support for the bailout plan.

McCain, appearing on ABC’s This Week, contradicted his running mate Sarah Palin’s comments on Pakistan. Palin is unqualified, Fareed Zakaria writes.

Americas

Analysts predict a grim September jobs report for the United States.

Venezuela plans to develop nuclear power, President Hugo Chávez says.

Rafael Correa is claiming victory in a constitutional referendum that will give the Ecuadoran president broad new powers.

Asia

China’s astronauts have a returned from their spacewalk to a hero’s welcome.

Pakistani feminists are ridiculing President Asif Ali Zardari for his now-infamous encounter with Sarah Palin.

The U.S. House of Representatives passed the nuclear deal with India. Next up? The Senate, where a few senators might choose to block it.

Middle East

Five bombs killed at least 31 people in Baghdad.

Syria’s state media is blaming foreigners for Saturday’s bomb, which killed 17 people near a Shiite shrine in Damascus. Blowback?

A car bomb struck a military bus in Tripoli, Lebanon, killing at least five people.

Europe and the Caucasus

The Social Democrats won the most seats in the Austrian elections, but two far-right parties also made big gains.

Belarus’s opposition parties have so far won zero seats in that country’s parliamentary elections.

Georgia’s economy is battered, but not destroyed by last month’s war.

Elsewhere

The U.S.-led war on terrorism is not weakening al Qaeda, a majority of respondents in a massive global BBC poll believe.

Ban Ki-moon, the U.N. Secretary-General, cuts a low profile on the world stage.

Today’s Agenda

U.S. President George W. Bush welcomes Viktor Yushchenko, the embattled Ukrainian president, to the White House.

Pakistan’s Foreign Minister Shah Mehmood Qureshi meets with U.S. Deputy Secretary of State John D. Negroponte in Washington.

Indian PM Manmohan Singh meets with French President Nicolas Sarkozy and José Manuel Barroso, the European Commission president, in Marseille for the annual EU-India summit.

Rosh Hashanah, the Jewish New Year, begins at sundown.

Blake Hounshell is a former managing editor of Foreign Policy.

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