Just after midnight this morning House and Senate leaders as well as Henry Paulson announced that a massive $700 Billion bailout deal has been reached. While the fine print is still to be finished, the bailout plan includes some provisions that House republican insisted on, namely to discourage some dumping of debt in favor of buying insurance from the government for the debt instead. "Reasonable" limits on executive compensation for those that seek assistance have been agreed upon, as well as warrants for taxpayers for shares of those companies that seek assistance. The impact of the deal is expected to unfreeze the credit markets.
Regardless of the results of a package, the fallout continues. According to various sources, Wachovia, one of the nation's largest banks, is in similar if not worse shape than Washington Mutual which was seized by the Fed last week. Talks have begun with Citigroup. The bailout deal may encourage Citigroup to take on Wachovia's bad debt. Again, we may be faced with a Sunday night surprise. If trends are any indication, the moment that your woes are headlined on the front page of the NY Times business section (as Wachovia's were on Saturday), you are usually on a 72 hour death watch.
Meanwhile, overseas, the credit crisis is threatening to fell it's first two major banks- Fortis from Belgium, and Bradford & Bingley from Great Britain. Both banks are working with their respective governments on urgent bailout packages. The fate of both banks could be decided as soon as tonight.
Lawmakers Reach Tentative Bailout Deal (WSJ)
Wachovia, Looking For Help, Turns To Citigroup (NY Times)
B&B And Fortis, Both In Crisis (Times/U.K.)