Treasury Relents on Key Points, Shelby Reiterates Opposition

The Wall Street Journal is reporting Treasury Relents on Key Points.

The Bush administration and the Democratic Congress inched closer to agreement on a $700 billion plan to rescue troubled financial firms, with the Treasury making most of the concessions amid an increasing backlash from a range of economists and lawmakers.

The administration agreed to allow tougher oversight over the cleanup and provide fresh assistance to homeowners facing foreclosure, two Democratic priorities. In addition, negotiators neared agreement on allowing the government to take equity stakes in certain companies that participate in the rescue.

But differences remain on two big items: possible limits on executive compensation at firms taking advantage of the bailout; and changes to bankruptcy law that would let judges adjust the terms of mortgages. And late Monday, negotiations were slowed -- but not derailed -- as Treasury was hit with congressional Republican concerns about the direction of talks, and as Democratic leaders heard a range of concerns from rank-and-file members of their party.

The plan's reception -- from academics, politicians and commentators of varied stripes -- has been largely hostile, weakening the administration's negotiating position on the remaining issues. On executive pay, Republican presidential candidate Sen. John McCain has called for limits.

Sen. Richard C. Shelby, an Alabama Republican and the ranking Republican on the Senate Banking Committee, reiterated his distaste for the plan, calling it "neither workable nor comprehensive, despite its enormous price tag." Sen. Shelby, whose influential position makes his opposition a potential stumbling block, called for Congress to look for alternative solutions.

Former St. Louis Federal Reserve Bank President William Poole, a senior fellow at the free-market Cato Institute, said, "The Treasury will be stuck with the least-attractive paper, and that means taxpayer losses will be large."

Discontent continued to simmer among rank-and-file Republicans and Democrats. In Republican ranks, especially among conservatives, there are concerns over the cost and over the scope of powers that would be concentrated with Secretary Paulson.

"Congress needs to slow down, take a breath," said Rep. Mike Pence, an Indiana Republican. He acknowledges the country faces a crisis but still intends to vote against the Treasury plan.

One broad area of agreement involves congressional oversight. Rep. Frank said the Treasury agreed to an independent board to monitor the bailout and report on its progress to Congress and the public. The board wouldn't have authority to veto Treasury investment decisions, and the bailout's launch wouldn't be delayed while a board was being put in place.

There has also been discussion among some Democratic leaders of breaking apart the package, with swift initial action on about a third of the borrowing authority, a senior congressional official said. Approval of the balance of the funding would come later this year or early next year, giving lawmakers a chance to assess the success of the bailout and consider additional long-term overhauls.

An independent board with no veto authority is a waste of taxpayer money. The Treasury has given up nothing on that point.

Help From A Democratic Congressional Aid

A Democratic Congressional aid and a reader of this blog phoned me just a bit ago thanking me for trying. He also offered this opinion.

"The only thing that can possibly derail this bill is to find a sympathetic Senator or Congressman willing to stand up for justice. You need to organize a massive phone in to that person's office. The one thing any Congressman understands is the phone ringing off the hook. You also must provide an alternative. Asking Congress to do nothing simply will not fly."

Based on new information, I have revised the most likely to help list slightly.

Most Sympathetic List

Shelby, Richard C.- (R - AL)
110 HART SENATE OFFICE BUILDING WASHINGTON DC 20510
(202) 224-5744
E-mail: senator@shelby.senate.gov

Bunning, Jim- (R - KY)
316 HART SENATE OFFICE BUILDING WASHINGTON DC 20510
(202) 224-4343
Web Form: http://bunning.senate.gov/public/index.cfm?FuseAction=Contact.ContactForm

Grassley, Chuck- (R - IA)
135 HART SENATE OFFICE BUILDING WASHINGTON DC 20510
(202) 224-3744
Web Form: grassley.senate.gov/contact.cfm#emailform

Kyl, Jon- (R - AZ)
730 HART SENATE OFFICE BUILDING WASHINGTON DC 20510
(202) 224-4521
Web Form: kyl.senate.gov/contact.cfm

Ensign, John- (R - NV)
Washington D.C. Office
119 Russell Senate Building
Washington, D.C. 20510
Phone: (202) 224-6244
Fax: (202) 228-2193
Web Form: ensign.senate.gov/forms/email_form.cfm

Congressman Mike Pence (R - IN)
Washington DC
1317 Longworth HOB
Washington, DC 20515
(202) 225-3021 office
(202) 225-3382 fax
Web Form: https://forms.house.gov/pence/IMA/contact_form.htm

Send this post to 5 or 10 of your friends and have them do the same. Do it now, while you are thinking about it.

I must be honest and state that this action is highly unlikely to work. However, it is the only shot we have, and some revisions might be considered or strengthened as a result of what we do.

Ask For A Filibuster

Please email and phone the following Senators with this message:

For the good of the United States of America, I am asking [Senator/Congressman] [insert name here] to stand up to justice and protect the taxpayer. Please filibuster Paulson's proposal. Instead, please consider solid alternatives offered by Hussman and Mish to recapitalize banks in a way that protects the taxpayer.

Shelby, Richard C.- (202) 224-5744
Bunning, Jim - (202) 224-4343
Grassley, Chuck - (202) 224-3744
Kyl, Jon - (202) 224-4521
Ensign, John - (202) 224-6244

Congressman Mike Pence - (202) 225-3021

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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