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| 19 September 2008The Financial Times reports, "A breakthrough agreement to create a giant US government-sponsored vehicle to take on toxic assets in the financial system looked possible on Thursday night as" Secretary Paulson, Federal Reserve chairman Ben Bernanke "and top lawmakers convened a dramatic meeting to discuss the financial crisis." The Treasury Department "said the meeting discussed a 'comprehensive approach to address the illiquid assets on bank balance sheets that are at the underlying source of the current stresses in our financial institutions and financial markets.'"
The New York Times reports the group of officials meeting with Hill leaders "included Christopher Cox, the chairman of the Securities and Exchange Commission." Congressional participants included Speaker Nancy Pelosi, Senate Majority Leader Harry Reid, Minority Leader Mitch McConnell, Sens Christopher J. Dodd and Richard C. Shelby of Alabama, House Minority Leader John A. Boehner of Ohio and Rep. Barney Frank.
The Washington Post reports, "Congressional leaders gave bipartisan support to the administration's efforts after" the meeting last night. According to "a participant in the meeting who spoke on condition of anonymity," Paulson and Bernanke "presented a 'chilling' picture of the state of the financial system," and "lawmakers were told that the consequences would be grave if they failed to pass legislation by the end of next week."
AFP reports, "In a brief news conference on Capitol Hill, Paulson, flanked by participants," said, "I think we saw the best of the United States of America in the speaker's office tonight. This country is able to come together and do things quickly when it needs to be done for the good of the American people." The AP reports Pelosi "said any potential action must protect taxpayers who are already on the hook for potentially billions of dollars in bailouts to financial firms taken down by the financial crisis."
The Wall Street Journal notes President George Bush met with Paulson, Cox and Bernanke "for 45 minutes Thursday to discuss 'the serious conditions in our financial markets,'" according to White House spokesman Tony Fratto. The "sweeping series of programs" under consideration "would represent perhaps the biggest intervention in financial markets since the 1930s."
The Christian Science Monitor reports, "Washington's response to the credit crisis so far has seemed to rely on daily improvisation. Perhaps it now needs something more organized: a new US government resale agency that would absorb and then dispose of the assets of damaged firms."
The Politico says "the discussions this week have sometimes been confused by comparisons to the Resolution Trust Corp. created to address the savings and loan crisis in the late 80s and early 90s." Sen. Charles Schumer "took the Senate floor Thursday to propose an alternative modeled on a Depression-era entity designed not to buy up bad assets but to invest in companies to give them needed capital to work their way out of debt." USA Today, Los Angeles Times and Washington Times also report on the talks.
Dems May Want Stimulus In Return Meanwhile, the New York Times reports, "Democrats, having their own desire for a second round of economic aid for struggling Americans, see the administration's request as a way to win White House approval of new spending to help stimulate the economy in exchange for support for the Treasury request." Democrats also "say they will push for relief for homeowners faced with foreclosure in return for supporting any broad bailout of struggling financial institutions."
On ABC World News, George Stephanopoulos said,"The Speaker of the House and other Democrats are also going to push that as part of the price for agreeing to a program like this, there is a second stimulus package that will include funding for unemployment, food stamps, home heating assistance, direct aid to taxpayers and consumers."
Media Downplays 410-Point Dow Rebound
The Dow Jones Industrial Average rebounded on Thursday on word that Treasury Secretary Henry Paulson was working to create an entity like the Resolution Trust Corporation to unwind the subprime mortgage crisis. ABC World News reported, "The market had its biggest one day rally since October 2002." Bloomberg News notes the S&P "advanced 50.12 points to 1,206.51, recovering most of yesterday's 4.7 percent tumble. The Dow surged 410.03, or 3.9 percent, to 11,019.69," and "the Nasdaq Composite Index jumped 100.25, or 4.8 percent, to 2,199.1."
Most media reports, however, caution that yesterday's Wall Street rally does not mean the crisis affecting the financial system is closer to being over. The New York Times says investors were "heartened by signs that the government is taking more drastic steps to tamp down problems plaguing the financial markets," but the market gains were "by no means a sign that the crisis on Wall Street had turned a corner."
The Washington Post titles its front-page story "Despite Late Surge, Markets Still Show Signs of Instability," and the Wall Street Journal says that "despite Thursday's late burst of buying activity, few participants are willing to call an end to the volatility and the generally bearish tone that has been the hallmark of trading this week." The Los Angeles Times and Financial Times ran similar stories.
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Normxxx
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