Weekend Wheeling And Dealing

Once again everyone's saying there will be a deal by tonight and even a vote, but that deal won't include any help for homeowners.

House Democrats say the idea of letting judges rewrite mortgages to help bankrupt homeowners avoid foreclosure won't be a part of the $700 billion financial industry bailout.

Speaker Nancy Pelosi, D-Calif., told Democrats at a closed-door meeting Friday evening the provision would be a deal-breaker for Republicans who she has said must deliver substantial votes for the rescue plan. That's according to several lawmakers who attended the session.

Democratic presidential nominee Barack Obama had said earlier that the measure didn't belong in the bailout.

Nor did I expect that measure to pass; it depended on the Democrats, you know, not folding.

Washington Post this morning has more.

A senior administration official, who requested anonymity to speak freely about the plan, said both sides had made significant concessions to achieve compromise. The Bush administration has agreed to accept a number of Democratic demands, including:

· The money would be dispersed in segments, with Paulson receiving $250 billion immediately, $100 billion upon White House certification of its necessity and the final $350 billion only after Congress has been given 15 days to object.

· Firms participating in the bailout would be required to grant the government warrants to obtain nonvoting shares of stock, so taxpayers can benefit if the companies return to profitability.

· Firms taking advantage of the bailout would be required to limit compensation for senior executives, with especially severe limits on "golden parachutes" at failing firms. The compensation limits will be enacted primarily, but not solely, through the tax code by reducing tax deductions for firms that pay executives more than $400,000 a year.

The administration also agreed to Democratic demands that the financial services industry should help pay for the program. Under the agreement, the president would be required to propose a fee on the industry if the government has not recovered its money through sales of the assets within five years.

Democrats also made a number of concessions, abandoning demands that bankruptcy judges be empowered to modify home mortgages on primary residences for people in foreclosure. They also agreed not to dedicate a portion of any profits from the bailout program to an affordable housing fund that Republicans claimed would primarily assist social service organizations that support the Democratic Party, the official said.

Meanwhile, House Republicans won a major victory, persuading negotiators to include a provision that would require the Treasury Department to create a federal insurance program that would guarantee banks and other firms against loss from any troubled asset, the official said.

Again, those last two paragraphs are the ones that bother the hell out of me. They are the GOP's doings and they are terrible. What do they mean to you and me?

1. No direct help for homeowners in this bill. More people will lose their homes and will continue to lose their homes as real estate prices plummet.
2. The "insurance program" now puts taxpayers on the hook for the loss of "any troubled asset" on the books. We just nationalized the losses on the financial sector and privatized the profits. And with dropping housing prices and dropping commercial and industrial real estate prices, that's going to be a tremendous amount of losses the American taxpayer is going to be on the hook for.
3. When the losses do pile up and the government has to make good on the insurance, the only way out is hyper-inflation and the death of the dollar.

This is horrendous, folks. Please, please somebody stop this bill.

[UPDATE] That physically ill feeling is back. From the NY Times article:

A senior administration official who participated in the talks said the deal was effectively done. “I know of no unresolved open issues for principals,” the official said.

In announcing a tentative agreement, lawmakers and the administration achieved their goal of sending a reassuring message ahead of Monday’s opening of the Asian financial markets.

Lawmakers, especially in the House, are also eager to adjourn and return home for the fall campaign season.

Among the last sticking points was an unexpected and bitter fight over how to pay for any losses that taxpayers may experience after distressed debt has been purchased and resold.

Democrats had pushed for a fee on securities transactions, essentially a tax on financial firms, saying it was fitting that they contribute to the cost.

In the end, lawmakers and the administration opted to leave the decision to the next president, who must present a proposal to Congress to pay for any losses.

Officials said they had also agreed to include a proposal by House Republicans that gives the Treasury secretary an additional option of issuing government insurance for troubled financial instruments as a way of reducing the amount of taxpayer money spent up front on the rescue effort.

We're about to be on the hook for trillions. Wall Street will be fine. That insurance will protect them. The American Taxpayer? Nobody's protecting them.

WE ARE ALL SCREWED.

sigh.