Chris Cantell Discusses Financials: Firm Critics over Rescue Plan Among Congressmen by Milota Sidorova

Democrats and Republicans alike agree one thing & critics on 'Paulson plan'.
The first passing discussion yesterday brought out more doubt and Henry Paulson along with Ben Bernanke had to use all determination to persuade Senators to do so.

First of all, many of them see the plan as 'not acceptable' as mentioned by Republican Senator Richard Shelby of Alabama. There's significant need to seek for another alternatives.
According few of the Congress, $700 billion either $700 trillion can't save the market nor fix the problem which core bases down in between undervalued mortgages and overpriced loans.
It's just a plaster not a cure.

Fears and delays in the Congress that was the worst option for Paulson and Bernanke duo.
They immediately declared delay will slow down not just credit market but the all economy.
When questioned of tax payers impacts, Paulson answered tax payers are always in danger, so the main task was to fix the credit market. Literally the backing billions are going to influence the ordinary citizen anyway.

Democrats were trying to move on concessions of administration on domestic spending and middle class economics. Republican Senator Jim Bunning, R-Ky argued the massive bailout was not the real solution and moreover this financial socialism was clearly un-American. If the company ultimately heads towards the bankrupt it should also bear the consequences.

FED mission promised the investigation in cases of Freddie Mac, Fannie Mae and AIG as well. But now, it was the time to pass the proposal into reality. However it seems it won't happen that soon. Bernanke urged to move on discussion and almost fierce declared the delay will increase jobs lost followed with jumping credit rate and home foreclosures.

The Democratic party had some other points to deal. First of all to forced judges to rewrite mortgages to lower bankrupt homeowners monthly payments. Senator Chuck Schumer D-N.Y. also suggested whether phasing model could be proposed. FED would cover $ 150 billion with a promise for upcoming money. This time, Republicans were firm and united and dropped out the whole idea.

More than troubled issue remained also the purchase price when FED representatives proposed maturity price, based on the expectations what they would be worth. Many Congressmen didn't believe of promised substantial benefits that Mr. Bernanke was speaking of. Assets wouldn't be bought according the market rules. It could deepen the bill in large scale.

Apart from Capitol Hill talks, distressing market overreacted. The shares were dropping. Dow Jones fell overnight 160 points and Treasury yields were all declining as well. As for financials, Treasury plans to sell $34 billion share in 2 year notes today and $24 billion in 5 year notes tomorrow. Naturally the step will be important to outline the future atmosphere all around Treasury. As for the government, it's still keeping its AAA rating. If it failed, the major buyers like China could immediately scale back their holdings.

The situation has to be solved now. However displayed as united decision, serious critics remain and we might see another market issue becoming a political one. Just six weeks before the election.


related story: http://news.yahoo.com/s/ap/20080923/ap_on_bi_ge/financial_meltdown;_ylt=AsGOCsZlxkw6fPjesKgrHUOs0NUE

by Milota Sidorova for PocketNews (http://pocketnews.tv)

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edited by Beata Bsikova