Markets made moderate gains Thursday on news that congressional leaders had agreed in principle to a bailout plan for troubled firms on Wall Street. But a White House meeting later in the day highlighted work that still needs to be done to reach a final agreement. Mike O'Sullivan reports, there is some skepticism in Congress over the plan and also among average Americans.
Key members of Congress announced Thursday they had agreed to the broad outlines of a $700 billion rescue package for failing financial companies, but several congressional Republicans cast doubt on the agreement after a White House meeting late in the afternoon. The meeting included President Bush, Democratic presidential nominee Barack Obama, Republican nominee John McCain, and leaders of both parties in Congress.
Senator Richard Shelby of Alabama, the senior Republican on the Senate banking committee, emerged from the meeting saying there is no agreement, and other fiscal conservatives in the president's Republican party are reported to be resisting the deal.
Senators McCain and Obama both say they are optimistic an agreement can be reached, but as Senator Obama put it, there is still some work that needs to be done.
Financial markets rose Thursday as they reacted with cautious optimism to news that a bailout agreement may be near. The Dow Jones industrial average finished up 196 points from its opening, although it was down from higher gains earlier in the day.
On what is called Main Street, there is uncertainty among average Americans about the nation's economy, and some people are skeptical about the Wall Street bailout plan being proposed in Washington.
Los Angeles physician Bill Kelly echoes the comments of many others, saying he knows that something must be done to avert a financial crisis, but he is not sure the proposed plan is the right one.
"I'm nervous," he admitted. "I think it should be a little slower and they don't really know that it will help."
Kelly wonders if the money might be better spent rebuilding the nation's infrastructure, paying for health and education, or helping struggling homeowners meet their mortgage payments. Others say that troubled Wall Street firms should be allowed to fail and that the U.S. financial system is resilient enough for the markets to solve their own problems.
The government bailout plan would buy the mortgage-based assets of troubled banks and investment firms, keeping them in business. The assets lost much of their value when housing prices dropped and many homeowners defaulted on their mortgage payments. The rescue plan is intended to reverse what President Bush has called a serious economic crisis. He says failure to act quickly could cause the failure of more banks, a drop in the stock market and losses in pension funds.