Congress Approaches Passage of Massive, Compromise-Laden Financial Bailout

Party Leaders Back Revised Plan for Bailout , New York Times
Sweeping Bailout Bill Unveiled, Washington Post
Bailout Plan in Hand, House Braces for Tough Vote, New York Times

After days of speculation and political maneuvering, it appeared on Sunday that Congress had reached a compromise in its efforts to pass a bailout of the United States' economy. The 110-page, $700 billion financial rescue legislation still needs the official approval of the House and Senate, but leaders from both the Democratic and Republican parties expressed confidence that the bill will pass quickly.

The proposed $700 billion package comes in three parts. $250 billion would be available for immediate distribution by the U.S. Treasury Department, with an additional $100 billion distributable with approval by the President. The remaining $350 billion would be made available with the approval of a congressional joint resolution.

While both Democratic congressional leaders and members of the Republican administration seemed pleased with the final draft of the legislation, each party had to make substantial compromises in its formulation. Among the most significant of these compromises was the administration's concession to congressional demands that the bill include a provision allowing for a potential repayment by the financial industry of the money invested in the bailout by the federal government. Other concessions included the Republicans' allowance of caps on executive compensation and Democrats' giving up their plan allowing restructuring of mortgages by bankruptcy judges.

Despite the compromises and deals made by the Bush Administration and congressional leaders, there remains a vocal, bipartisan opposition to the bailout legislation--the bulk of which is centered on the notion that it is inappropriate to use public tax dollars to make up for the mistakes of the private-sector financial community.

Discussion Questions:
1. Is the bailout legislation, in its current incarnation, the answer to the potentially worsening predicament facing the American financial community?

2. Which, if any, of the compromises made by the parties negotiating the legislation should not have been made?

3. What, if anything, is the legislation missing? What, if any, provision of the legislation should have been left out?

4. Does the bailout bill provide sufficient oversight for the Treasury Department and its infusion of money into the market?