The Bush administration and congressional leaders finally agreed late Sunday night to authorise the biggest banking rescue in US history. The $700bn scheme would effectively nationalise an array of mortgages and securities backed by them. After lawmakers drafted the bill, House speaker Nancy Pelosi declared it “frozen,” meaning no changes would be made. The bill leaves many mechanics of the operation up to the Treasury, reports the WSJ, among them: how the government decides which assets to buy and how much to pay for them. The Treasury has 45 days to issue guidelines on these procedures. Congress will vote on the bill from Monday but, the FT adds, some House Republicans could refuse to back the bill. Under the plan, the US financial services sector could be forced to reimburse the government for any losses in the $700bn rescue plan. The deal envisages historic restrictions on executive pay for banks involved and opens the door for the government to take equity warrants in those institutions. Full text of the draft bill here.
