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U.S. Congress to vote on bailout plan

(CNN) — U.S. lawmakers were set to vote Monday on the biggest proposed government intervention in the U.S. economy since the Great Depression of 1929 after government officials, Treasury chiefs and political leaders agreed details of a $700 billion rescue plan to prop up the nation’s ailing financial system.

Speaking to reporters at the White House on Monday, U.S. President George W. Bush said the proposals would address the root cause of the financial crisis and restore strength and stability to the U.S. financial system. He also urged lawmakers to pass the bill promptly.

A vote for this bill is a vote to prevent economic damage to your community, Bush said.

Governments, markets and businesses around the world have been watching developments in Washington closely amid fears that failure to tackle the crisis on Wall Street could have disastrous repercussions for the global economy as a whole.

Markets tumbled again on Monday amid continuing uncertainty over the U.S. bailout plan and fresh anxiety over the longterm consequences of so-called toxic debts which have already brought many established financial names to their knees.

On Monday the UK’s Bradford Bingley mortgage lender became the second British bank to be taken into public ownership as a consequence of the fallout from the credit crunch. (Full story)

Troubled Dutch-Belgian insurance giant Fortis also received an 11.2 billion euros ($16.4 billion) lifeline to protect it from insolvency over the weekend from the governments of Belgium, the Netherlands and Luxembourg. (Full story)

In Asia, Hong Kong’s benchmark Hang Seng Index shed 4.31 percent to 17,876.41 while Tokyo’s Nikkei closed down 1.3 percent at 11,743.61. In Europe, London’s FTSE 100 slipped 2.2 percent, Paris’ CAC-40 was down 2.6 percent and Frankfurt’s DAX fell 2.6 percent.

The U.S. bill, released Sunday and endorsed by Bush after days of intense negotiations, is based on Treasury Secretary Henry Paulson’s request for authority to purchase bad debts from financial institutions so banks can resume lending to enable credit markets, now virtually frozen, to resume operating normally.

But concerns among some politicians over potential costs to taxpayers has seen several amendments inserted to protect them from risk while giving them a chance to share in any profits if companies on Wall Street benefit from the plan.

The 106-page bill was expected to be put to a vote in the House of Representatives Monday, while the Senate is expected to schedule a vote on Wednesday. Watch more about the impact of the deal on world markets

House Speaker Nancy Pelosi said the provisions added by Congress — which include a restriction on salary packages for senior executives whose companies benefit from the rescue plan — will protect taxpayers from having to foot the bill for the bailout.

We sent a message to Wall Street — the party is over, she said at a press conference Sunday with other Democratic leaders from the House and Senate.

However she added that people have to know that this isn’t about a bailout of Wall Street. It’s a buy-in so we can turn our economy around.

The aim of the rescue plan, which Paulson has been pushing since September 18, is to unfreeze the credit markets — short-term lending among banks and corporations. The core of the problem is bad real estate loans that led to record foreclosures when the housing bubble burst and home prices declined.

In the past two weeks, the banking world and Wall Street have been reordered by a wave of collapses and corporate mergers. The U.S. government has already intervened to protect key mortgage lenders Fannie Mae and Freddie Mac and insurance giant AIG. Investment bank Lehman Brothers filed for bankruptcy while Merrill Lynch was forced to sell itself to Bank of America.

The most recent development was the seizure by federal regulators on Thursday night of Washington Mutual, once the nation’s largest mutual savings bank and a major mortgage lender.

Key provisions of the bill

Doling the money out: The $700 billion would be disbursed in stages, with $250 billion made available immediately for the Treasury’s use. Authority to use the money would expire on December 31, 2009, unless Congress certifies a one-year extension.

Protecting taxpayers: The ultimate cost to the taxpayer is not expected to be near the amount the Treasury invests in the program. That’s because the government would buy assets that have underlying value.

If the Treasury pays fair market value — which investors have had a hard time determining — taxpayers stand a chance to break even or even make a profit if those assets throw off income or appreciate in value by the time the government sells them. If it overpays for the assets, the government could be left with a net loss but would get something back on the open market for the assets when it eventually sells them.

If it ends up with a net loss, however, the bill says the president must propose legislation to recoup money from the financial industry if the rescue plan results in net losses to taxpayers five years after the plan is enacted.

In addition, Treasury would be allowed to take ownership stakes in participating companies.

Stemming foreclosures: The bill calls for the government, as an owner of a large number of mortgage securities, to exert influence on loan servicers to modify more troubled loans.

In cases where the government buys troubled mortgage loans directly from banks, it can adjust them more easily.

Limiting executive pay: Curbs would be placed on the compensation of executives at companies that sell mortgage assets to Treasury. Among them, companies that participate will not be able to deduct the salary they pay to executives above $500,000.

They also will not be allowed to write new contracts that allow for golden parachutes for their top five executives if they are fired or the company goes belly up. But the executives’ current contracts, which may include golden parachutes, would still stand.

Overseeing the program: The bill would establish two oversight boards.

The Financial Stability Oversight Board would be charged with ensuring the policies implemented protect taxpayers and are in the economic interests of the United States. It will include the Federal Reserve chairman, the Securities and Exchange Commission chairman, the Federal Home Finance Agency director, the Housing and Urban Development secretary and the Treasury secretary.

A congressional oversight panel would be charged with reviewing the state of financial markets, the regulatory system and the Treasury’s use of its authority under the rescue plan. Sitting on the panel would be five outside experts appointed by House and Senate leaders.

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Wall Street woes hit charities, nonprofits

NEW YORK (AP) — Financial services firms and their well-paid executives have historically been generous givers to museums, colleges, hospitals and social service organizations, both in New York and around the globe.

Now, nonprofit administrators are watching the crisis on Wall Street with queasy stomachs as reliable donors like Lehman Brothers, American International Group, Merrill Lynch and Bear Stearns change hands or go belly up.

For now, the firms that have taken over struggling companies aren’t saying what they’ll do, and it may be months before charities learn whether pledges are being honored.

We’ve got a big question mark hanging over our heads, said Marsha Stein, executive director of Citymeals-on-Wheels, a group that relies heavily on private donations to deliver food to 18,000 homebound New Yorkers.

Bear Stearns employees, alone, she said, were good for about $500,000 in donations to Citymeals each year — generosity due partly to the firm’s requirement that its 1,000 senior directors contribute 4 percent of their annual compensation to charity.

That support came into question overnight when the firm disintegrated in March and was purchased by JPMorgan Chase.

The crisis is likely to hit nonprofits on several fronts, said Gordon J. Campbell, president and chief executive of the United Way of New York City.

found here.

Wall Street woes hit charities, nonprofits

NEW YORK (AP) — Financial services firms and their well-paid executives have historically been generous givers to museums, colleges, hospitals and social service organizations, both in New York and around the globe.

Now, nonprofit administrators are watching the crisis on Wall Street with queasy stomachs as reliable donors like Lehman Brothers, American International Group, Merrill Lynch and Bear Stearns change hands or go belly up.

For now, the firms that have taken over struggling companies aren’t saying what they’ll do, and it may be months before charities learn whether pledges are being honored.

We’ve got a big question mark hanging over our heads, said Marsha Stein, executive director of Citymeals-on-Wheels, a group that relies heavily on private donations to deliver food to 18,000 homebound New Yorkers.

Bear Stearns employees, alone, she said, were good for about $500,000 in donations to Citymeals each year — generosity due partly to the firm’s requirement that its 1,000 senior directors contribute 4 percent of their annual compensation to charity.

That support came into question overnight when the firm disintegrated in March and was purchased by JPMorgan Chase.

The crisis is likely to hit nonprofits on several fronts, said Gordon J. Campbell, president and chief executive of the United Way of New York City.

found here.

Kyle batters Nova Scotia, loses hurricane strength

MIAMI, Florida (CNN) — Hurricane Kyle battered the shores of Canadian province Nova Scotia on Sunday evening before weakening and losing tropical characteristics, forecasters said.

Though Kyle was no longer considered a tropical cyclone by 11 p.m. AT, it still was producing maximum sustained winds near 70 mph (112 kph) — at tropical-storm strength, the National Hurricane Center said.

Its center at 11 p.m. AT was about 60 miles (96 kilometers) south of Saint John, New Brunswick, moving north. Kyle’s remnants were expected to pass over New Brunswick overnight, the hurricane center said.

Three hours earlier, Kyle was a Category 1 hurricane, with maximum sustained winds of 75 mph (120 kph), just off Nova Scotia’s western tip.

Kyle’s center spared Maine, but with tropical-storm force winds of more than 39 mph (62 kph) extending across the Bay of Fundy, part of the state was under a tropical storm warning in the evening. That warning expired at 11 p.m. AT.

Maine’s coast was hit by heavy rain for the third straight day, causing some road flooding, according to The Associated Press.

Kyle at one time was forecast to hit Maine more forcefully.

This was a run-of-the-mill storm. It had the potential to be a real problem and it all sort of went away. That shift to the east did wonders for Maine, Michael Hinerman, director of the Washington County Emergency Management Agency, told the AP.

found here.

Typhoon lashes Taiwan with torrential rains

TAIPEI, Taiwan (AP) — Typhoon Jangmi roared toward eastern China on Monday after lashing Taiwan with torrential rains and powerful winds that killed two people and injured more than 30.

Jangmi — the fourth and most powerful typhoon to hit the island this year — made landfall in Ilan county in northeastern Taiwan at mid-afternoon Sunday, the Central Weather Bureau said.

Jangmi was downgraded to a tropical storm early Monday as it moved north toward seas off eastern China, the bureau said. But offices and schools were shut down Monday because of the storm’s impact, and the Taiwan stock market was closed.

At Taipei’s international airport, operations resumed after being interrupted late Sunday, but it could take hours to clear up the backlog of delayed flights, airport authorities said.

Power was cut to 86,000 households as the area was hit by gusts of up to 140 miles per hour (227 kilometers per hour) , the highest level the bureau’s equipment can measure, the weather bureau said.

The strong winds overturned a bus on a highway near the northeastern city of Ilan, injuring 36 passengers, the Disaster Relief Center said. Watch damage caused by the typhoon

Outerbands of the storm continued to dump heavy rains in central and southern Taiwan Monday, with the scenic Alishan resort area recording nearly 32 inches (0.8 meter) of rain, the bureau said.

Officials said groups of Chinese tourists were turned away from Alishan, a favorite sightseeing spot for the mainlanders.

ETTV Cable News showed rampaging waters overflowing the banks of a main river in Nantou county in central Taiwan as villagers were rescued from their flooded houses.

An 82-year-old man was killed when he fell into a flooded rice paddy and an 18-year-old girl was killed by a fallen electric wire in central Taiwan, the Disaster Relief Center said.

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