WORLD> America
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Bush to announce expanded bank bailout details
(Agencies)
Updated: 2008-10-14 09:59 The $700 billion rescue program that Congress passed on Oct. 3 will continue to feature the purchase by the government of banks' bad assets but will now devote a significant part of the effort to direct government purchases of stock in banks, an idea that Paulson brought up only last week.
Major stock markets around the world surged higher, after plunging ever lower last week, as traders began to hear of Europe's actions and the possibility of further steps in the United States. On Wall Street, a record 936-point increase in the Dow Jones industrials far surpassed the previous one-day mark of 499 points, set in the waning days of the dot-com boom in 2000. But the surge came after the staggering losses of the worst week ever, and economists said more rough days can be expected. European markets rallied following Asia's lead in response to the widespread government initiatives. "These are tough times for our economies, yet we can be confident that we can work our way through these challenges and America will continue to work closely with the other nations to coordinate our response to this global financial crisis," Bush said. Democrats in Congress, while supportive of Paulson's desire to expand the program, complained earlier Monday that not enough strings were being attached, such as restricting excessive compensation for Wall Street executives who raked in millions of dollars in bonuses by pursuing risky investment strategies that have now helped push the US financial system to the brink. The government should purchase only stock in financial firms that agree to cut dividends paid to shareholders, adhere to strict limits on executive compensation and curb their use of exotic investment strategies, said Sen. Charles Schumer, D-N.Y., chairman of the Joint Economic Committee. The Bush administration also announced the selection of a team of interim managers, picked an outside firm to help run the program and selected a prominent New York law firm to draw up guidelines for how the stock purchase program will work. Officials also announced that Bernanke had agreed to serve as chairman of the oversight board Congress mandated. |