The US Commission on Presidential Debates has said the Friday debate between candidates Barack Obama and John McCain must go on as scheduled, despite McCain's plea to postpone the debate so he could look into the economy.
While Congress considers how and when to act,
Bush administration officials warned of a looming economic disaster if Congress failed to act swiftly to fund the $700 billion bailout that would be larger than the total cost of the
Wrangling over the bailout overshadowed Berkshire Hathaway Inc's $5 billion investment in embattled Wall Street titan Goldman Sachs Group Inc, which is transforming into a traditional bank to shield itself from the crisis. Goldman's shares closed 6.4 percent higher.
"I am to some effect betting on the fact that the government will do the rational thing and act properly,"
U.S. President George W. Bush will seek to convince the American public to support the plan, which empowers the government to buy toxic mortgages at the center of the crisis, in a televised address Wednesday night.
Republican presidential candidate U.S. Sen. John McCain said he will break off from his campaign to return to
"McCain's gambit portends the further politicization of the crisis/bailout issue and thus could complicate efforts to enact (the) $700 billion (bailout) ... by as early as this weekend," Chuck Gabriel, managing director at Washington-based consultants Capital Alpha Partners, said in a note to clients.
Democratic candidate U.S. Sen. Barack Obama indirectly accused McCain of playing politics and said the first of a series of planned presidential debates should go ahead.
"What is important is that we don't suddenly infuse Capitol Hill with presidential politics," Obama said.
"What I'm planning to do now is debate on Friday," the
While investors see an 80 percent chance that the U.S. Congress will approve the bailout by the end of the month, according to Intrade, an online betting site, many lawmakers are demanding changes to the bailout plan.
The changes include more protections for taxpayers and restrictions on the pay of executive at companies that unload their bad assets.
U.S. Rep. Barney Frank, chairman of the House Financial Services Committee, said Democrats would have their version of the bailout -- with changes -- ready by Thursday and would then start negotiations with Republicans.
The uncertainty has roiled markets.
"There's a tremendous amount of anxiety whether this (bailout) bill will get passed," said Thomas di Galoma, head of
As Federal Reserve Chairman Ben Bernanke and U.S Treasury Secretary Henry Paulson toiled to convince Congress to approve the plan allowing the government to buy up toxic mortgages and other bad assets that have dried up global credit, financial markets showed extreme strain.
Scarce credit forced overnight lending rates for companies to 6.50 percent. The U.S. dollar fell against the euro and global stocks seesawed as unease over the rescue plan -- which could cost every man, woman and child in
Paulson, himself a former Goldman Sachs boss who built a $700 million fortune on Wall Street, tried to downplay the cost of the rescue.
"(This) is not a spending program," he told lawmakers. "It is an asset purchase program, and the assets which are bought and held will ultimately be resold with the proceeds coming back to the government."
A new report showed existing
Washington Mutual Inc's stock fell almost 30 percent after Standard & Poor's slashed its credit rating to junk status on expectations that any sale of the largest U.S. savings and loan would be done in pieces, and that its assets were worth less than its debts.
Other nations braced for fallout from the crisis. Business confidence weakened in
In the second day of congressional hearings, U.S. Rep. Baron Hill, a Democrat from
Bernanke bluntly warned, "Choking up of credit is like taking the lifeblood away from the economy."
Asked if the crisis would match the Great Depression of the 1930s, Bernanke said, "I think this is the most significant financial crisis of the postwar period of the
With many members of Congress up for re-election, lawmakers are reluctant to merely rubber-stamp the rescue plan.
"I suspect it's true of every one of my colleagues. (They) are not just against this bailout, they're very angry," Rep. Lloyd Doggett, a Texas Democrat, told Bernanke.
The crisis comes after a month of turbulence marked by the government's takeover of mortgage companies Fannie Mae and Freddie Mac, the bailout of insurer American International Group Inc, and the bankruptcy filing of investment bank Lehman Brothers Holdings Inc.
The head of the Congressional Budget Office, Peter Orszag, warned lawmakers of possible "chaos" if Congress does nothing resulting in a meltdown, "maybe on the magnitude of the Great Depression," he said.
That type of rhetoric left many investors jittery.
"The resistance we're seeing in
Date created : 2008-09-25