After a whirlwind weekend of negotiations, the political dimensions of the Treasury Department’s $700 billion mortgage bailout proposal are starting to take shape, even as the financial sector continues to shift dramatically. The New York Times, the Washington Post, the Los Angeles Times, and USA Today each lead with their latest analysis of how the Treasury Department’s proposal will wind its way through Congress. The Wall Street Journal leads with the end of the era of investment banking, as Morgan Stanley and Goldman Sachs opt to become holding companies.
Now that Treasury Secretary Henry M. Paulson has presented members of Congress with an outline of his plan, Congress is weighing in with a few ideas of its own. While support for the concept of the buyout seems solid at the moment, the papers all say that Democrats and Republicans each have concerns they want addressed. The NYT focuses on high-ranking Democrats’ desire to see greater industry regulation attached to the bill, up to and including regulating the salaries of executives whose companies participate in the buyout. Other concerns include increasing the programs’ oversight requirements and perhaps including some sort of assistance for troubled homeowners. The WSJ says that the argument for housing aid adds a bitter twist to the debate, since “taxpayers are now both creditors and debtors in the housing mess.” The LAT suggests the buyout may help homebuyers indirectly, even without any special aid for consumers.
House Republicans, meanwhile, want assurances that any profits made from the eventual sale of these distressed assets will be used to pay down the national debt, says the WP. Some Republicans continue to voice concern over the scope and cost of the package, but the papers all agree that the chances of anyone stalling the measure are slim. Paulson is quoted in all the papers asking Congress to pass his proposal without significant changes and saying he still hopes Congress will pass the bill before leaving for a recess on Friday.
The WSJ explains that the conversion of the last two investment banks to commercial banking is meant to stabilize the financial titans and keep them from going the way of Lehman Bros. Becoming retail banks will mean that Morgan Stanley and Goldman Sachs will be able to use bank deposits as a cushion for their investments. In exchange, they will now face greater regulation, stricter debt limits, and, in all likelihood, lower profitability than they’ve seen in the past. The NYT calls the move “a blunt acknowledgment that their model of finance and investing had become too risky.”
Financial institutions are lobbying members of Congress at full tilt, reports the NYT. Some are pushing for an expanded bailout package that would go beyond just mortgages and allow the government to buy up “any financial instrument.” The paper also says that several companies are especially interested in who will manage the government’s new acquisitions, a contract that could easily be worth billions annually.
The NYT notes that the Asian markets’ reaction to the weekend’s developments was cautiously positive in early trading.
The WP fronts a man-on-the-street piece about local taxpayer resentment of the buyout plan.
The NYT goes inside with a piece on how the power of the treasury secretary has grown over the last two years. The paper goes on to speculate about who will take over from Paulson after the next president takes office.
USAT off-leads with Pakistan saying it has declined the FBI’s help in investigating the hotel bombing in Islamabad. The attack killed 53 people, including two Americans. Inside, the NYT examines the political implications of the attack.
Virginia’s 13 electoral votes are in play for the first time in more than 40 years, a phenomenon that’s made life easier for fundraisers from both parties. Virginians gave $25.3 million during the current election cycle, says the WP, up from $14.2 million during the 2004 campaign. Contributions to Democratic presidential candidates led donations to Republicans by about 5-to-3, with about 85 percent of all donations coming from Northern Virginia donors.
Of course, voting in Virginia has already begun for some people, according to USAT. Virginia is one of 34 states that have some type of early-voting program. The paper claims that more people will vote early this year than ever before, with one expert predicting that nearly one-third of the electorate will vote before Nov. 4.
The LAT fronts coverage of last night’s Emmy Awards, in which Mad Men and 30 Rock won the top prizes.
The NYT fronts (and USAT teases) a farewell to Yankee Stadium.
