Lawmakers in the United States were able to reach an agreement over the weekend regarding details of the US$700 billion plan to buy up distressed mortgage assets from banks.
Under the Emergency Economic Stabilization Act of 2008, the Treasury Department will immediately receive $250 billion to start purchasing those assets.
If needed, an additional $100 billion is available at the discretion of the president, and a another $350 billion is on the table.
Also included in the act are limited caps on the pay and benefit packages of companies who receive government aid and an insurance program for banks’ toxic assets.
“This bill provides the necessary tools and funding to help protect our economy against a system-wide breakdown,” said U.S. President George W. Bush on Monday. “Without this rescue plan, the costs to the American economy could be disastrous.”
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The House of Representatives is expected to vote in favour of the deal on Monday afternoon.
The Senate will vote on the agreement later this week.
Separately, Citigroup announced it would acquire the banking operations of Wachovia with assistance from the Federal Deposit Insurance Corporation.
Wachovia will continue to own retail brokerage A.G. Edwards and asset manager Evergreen Investments.
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