After what appeared to be major inroads on Thursday, Congressional leaders have experienced another major bump in their efforts to execute a $700 billion bailout of the financial sector.
The near collapse of the U.S. financial system has policy makers wrangling over how to repair the tattered markets. Yesterday, after morning deliberations, Senator Bob Bennett (R-Utah) told the Associated Press, "I now expect that we will indeed have a plan that can pass the House, pass the Senate [and] be signed by the president."
That was before discussions broke down late yesterday as Republican law makers offered up an alternative plan. Debates over corporate compensation, and the value of mortgaged backed securities, among other issues, have kept Democrats and Republicans at work trying to find a bipartisan solution to a problem that will saddle taxpayers on Main Street with the bill. The new plan being presented by Republican leaders is said to offer banks the option of buying insurance for troubled instead of relying on tax payer dollars.
The news comes a day after President George W. Bush said on Wednesday, "our entire economy is in danger." The comments followed a difficult last few weeks on Wall Street. The bailout will hopefully free up some cash, allowing businesses to get loans, and increasing employment levels, says Leonard Wright, Chairman of Financial Planning at the California Society of CPA. "[Then] the banks could move on to deal with other problems," says Wright. But the question remains, how the bailout will affect Main Street America. Some don't see much help for the average American. "A year ago, when Bear Stearns collapsed we were assured by the Federal Reserve Board Chairman Ben Bernanke and Treasury Secretary Henry Paulson that all the risks were well contained, they were mistaken then, and I believe they are mistaken now," says Jeff Wilson, President of Wilson Advisory Group, a wealth management group based in Denver, Colo. "We have to invest in Americans instead of buying toxic debt," a term associated with the debt being purchased by the government, says Wilson.