Lawmakers Reach Bailout Breakthrough Early Sunday Morning

Lawmakers' intensity and frustration was fueled by a battle over a plan that is enormously unpopular with voters in an election year. However, the $700 billion bailout seems to be an unavoidable measure to stabilize the markets. Consequently, that battleground is to make it a palatable as possible before going back to hometown campaigns.

The early details seem to reflect several bi-partisan compromises that reign the original Treasury proposal.

Treasury Secretary Hank Paulson, Senate majority Leader Harry Reid (D-NV), House Majority Leader Nancy Pelosi (D-CA), and chief Democratic negotiator Barney Frank (D-MA) the Chairman of the House Finance Committee emerged at 12:30 to announce an agreement.

Initial reports outline the final plan as including the following key provisions:

• Bailout funds would be issued in segments. The initial $250 billion would immediately be released to the Treasury department, with another $100 billion to be released following a White House report to Congress justifying the need, and a final $350 billion following a 15 day period where Congress would need to vote.

• Firms that participate in the bailout would be required to issue warrants to buy nonvoting shares, which would give taxpayers potential upside if the firms return to profitability.

• Participating firms would required to limit executive pay. Removal of "golden parachutes" would be partially enforced through tax code revisions to remove tax deductions for firms paying executives more than $400,000.

• The financial services industry would also be asked to help pay for the bailout. Tentative provisions for a FDIC-type fee assessed to financial service firms to build a bailout fund also appear to be included.

• Rejected was a Democratic initiative to earmark up to 20% of potential profits from the bailout to an affordable housing program--a provision met with much controversy over the alleged ties of the ACORN organizations ties to the Democratic Party and voter fraud.

Although the plan is not "committed to paper," as House Leader Pelosi states, the plan appears ready to go to vote and provide the market with much need details for a Monday open of Wall Street. Still expected to be unpopular, lawmakers hope it will start money and credit flowing through the economy again.