You can find more stories like this in our On the Brink series.
Lawmakers were poised on Thursday to vote on a financial-sector rescue plan by the weekend after hammering out most details and disagreements in an overnight session.
Lead negotiators on both sides of the aisle from the House and Senate gathered Thursday morning to mend remaining bridges before meeting with President George Bush to finalize the package in the afternoon. Lawmakers hope to seal the deal Friday after constructing a final draft of the legislation in another overnight session.
There will certainly be modifications to Treasury Secretary
$700 billion three-page proposal, which was sparse on details of how funds would be used and did not offer any direct assistance to homeowners.
Rep. Barney Frank (D., Mass.), chairman of the House Committee on Financial Services, said Thursday afternoon that the only remaining sticking point in negotiations was whether to allow bankruptcy judges to restructure mortgages to help Americans in danger of losing their homes. That measure is "still in discussion," Frank said, on the way to meet with the president.
Frank also said there will be restrictions on executive compensation, including a "say on pay" provision for shareholders. There will also be a provision to stem foreclosures and "very strong oversight" included in the bill. Rather than disperse the full $700 billion all at once, Frank also said there will be a "phasing in" of payments in smaller increments. Sen. Charles Schumer (D., N.Y.) had advocated the measure.
The Bush administration agreed in principle to Democrats' demands to include limits on executive pay and perhaps award taxpayers equity stakes in companies that receive public assistance, lawmakers said.
The rescue plan -- unprecedented in size and scope -- was assembled by Paulson,
Chairman Ben Bernanke and other experts to handle a growing crisis on Wall Street that sealed the fate of several major financial institutions. Since March,
have either failed, been bailed out by the government or acquired.
Before Paulson's plan was unveiled, rumors spread that other banks, like
may meet the same fate.
Under Paulson's plan, the government would hold auctions to buy troubled assets of the banking sector, focusing on residential and commercial mortgage securities. The administration sought broad authority to buy other troubled assets -- whether student loans, credit card debt or real-estate assets -- though there was some pushback from Congress on that idea.
In theory, the measure would allow banks to take their focus off of illiquid assets that are quickly losing value, and restore normal business. Paulson and Bernanke said the move would help Americans by making loans more available, lowering borrowing costs and preserving jobs that would otherwise be lost as businesses contracted.
Word of the proposal's impending passage restored confidence to the market, with the
Dow Jones Industrial Average
rallying nearly 300 points higher by the afternoon. Financial components led the broader charge, with
up more than 7.5% at $43.53;
rising 4% at $38.98;
Bank of America
adding 3.7% at $34.29; and
gaining 2.6% at $19.45. The NYSE Financial Sector Index gained 3.5%.
However, shares of
, which has been looking for a buyer or investor as it struggles under the weight of bad mortgage debt, continued to come under pressure as investors wondered how the bill would affect the troubled thrift. Its stock dropped more than 27% to $1.64.