News

After the US government bailed out the two-mortgage giants Fannie Mae and Freddie Mac and the biggest US insurance company American International Group (AIG), it is now seeking approval from Congress for its plan to buy up to $700 billion in toxic mortgage assets.



However, both Democrats and Republicans have made reservations about the plan. Areas of concerns are executive pay for banks participating in the scheme, oversight and equity warrants.



Democrats and some Republicans have called for curbs for managers of financial companies participating in the bail out plan. However, the Treasury Secretary has said this could deter banks from participating in the programme and undermine its effectiveness.



Both parties have also demanded that the government take equity warrants in the banks it rescues.



Another issue is that the proposed plan proposes no other restriction on the Treasury Department than requiring semiannual reports to Congress.



A bail out plan is nonetheless expected to be approved this week by Congress.



For more information, read "Bail-out faces flak from wary Congress" in the Financial Times:

http://www.ft.com/cms/s/0/ec3dfdba-896e-11dd-8371-0000779fd18c,dwp_uuid=11f94e6e-7e94-11dd-b1af-000077b07658.html