The political fight over the Bush administration’s financial rescue plan intensified on Monday as the two presidential candidates joined legislators in signalling concerns about the $700bn package.
The main points of friction
Oversight The US Treasury proposed briefing Congress on the bail-out plan initially after three months and every six months after that with no further legal or administrative review. But Democrats want much stricter oversight of the new authorities. Christopher Dodd, chairman of the Senate banking committee, proposed the creation of an Emergency Oversight Board composed of the chiefs of the Federal Reserve, the Federal Deposit Insurance Corporation, the Securities and Exchange Commission and a congressional representative to meet initially after two weeks and then on a monthly basis. Mr Dodd is also proposing the creation of a special inspector general to monitor the programme, while Barney Frank, chairman of the House financial services committee, is suggesting a greater role for the Government Accountability Office.
A second stimulus package Democrats have throughout the year unsuccessfully sought a second round of measures to revive the US economy, centred around a boost to infrastructure spending, home heating assistance, and possibly more rebate cheques to consumers. They may now have more leverage to demand broader economic legislation in exchange for an agreement on the financial bail-out. But the administration and many Republicans are still resisting.
Executive compensation Democrats hope to persuade the administration to agree on pay curbs for managers of financial companies participatingin the $700bn bail-out plan. But Hank Paulson, Treasury secretary, has expressed fears that these restrictions might deter banks from participating in the programme and undermine its effectiveness.
Although the administration indicated it was likely to give in to calls for more oversight of the plan, it remained at odds with influential congressmen over issues such as executive pay and whether the federal government would take a stake in financial institutions it assisted.
