Candidates slam bailout plan

Congress attacks 'blank cheque' rescue package for Wall St. firms Congress

Sheldon Alberts, with files from Eric Beauchesne, Canwest News Service

Published: Tuesday, September 23, 2008

WASHINGTON - Warning lawmakers that the "world is watching" how Congress responds to the U.S.'s financial crisis, President George W. Bush yesterday urged quick passage of his proposed $700-billion rescue package for companies burdened by toxic mortgage assets.

But early support for the White House plan ran up against new resistance from congressional Democrats who said any bailout must limit pay packages for Wall Street executives and see taxpayers get a share in the troubled companies who receive aid.

The emergency plan proposed by U.S. Treasury Secretary Henry Paulson also met with sharp criticism from the two presidential candidates, with Republican John McCain bemoaning the possibility of "bloated golden parachutes" for chief executive officers and Democrat Barack Obama saying Congress cannot cut a "blank cheque" for Wall Street.

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U.S. President George W. Bush departs the White House yesterday for his trip to New York for the United Nations General Assembly. Earlier in the day, Mr. Bush appealed to Congress to pass a proposed $700-billion U.S. bailout package for struggling banks and investment firms.

The unease in Washington came as markets tumbled yesterday, with the Dow Jones falling 376 points after early excitement about the unprecedented bailout plan gave way to anxiety.

At the White House, Mr. Bush appealed to Congress to craft legislation dealing only with his specific request for the government to assume bad loan assets from struggling banks and investment firms.

"It would not be understandable if members of Congress sought to use this emergency legislation to pass unrelated provisions or to insist on provisions that would undermine the effectiveness of the plan," he said.

"The whole world is watching to see if we can act quickly to shore up our markets and prevent damage to our capital markets, businesses, our housing sector and retirement accounts."

While Mr. Bush said he believed Congress was making "good headway" on a bill to authorize the rescue plan, Democrats said it must include measures to strengthen oversight of Wall Street and help homeowners struggling through the ongoing housing crisis.

The Democratic counterproposal would give the U.S. government a share in companies allowed to dump bad assets on American taxpayers and the right to review the Treasury Department's decisions.

Amid fears of a backlash among voters wondering why the government is rushing to save Wall Street, Democrats also are backing a plan to provide assistance to homeowners struggling to meet their mortgage payments.

It would allow bankruptcy judges in the U.S. to rewrite the terms of some mortgages to lower payments, a plan hotly opposed by banks.

Executives at firms receiving government aid would be barred from receiving "inappropriate or excessive" pay packages.

Mr. McCain suggested CEOs of ailing companies be limited to annual salaries of $400,000 -- the amount earned by the U.S. president -- and be banned from receiving severance packages underwritten by taxpayers.

"We can't have taxpayers footing the bill for bloated golden parachutes," Mr. McCain said in Scranton, Pennsylvania.

He added that he was "deeply uncomfortable" with the Bush administration's bailout plan because Congress was being rushed into rubber-stamping a plan crafted predominantly by one man, Mr. Paulson.