What could be the most expensive government intervention in history went through today, but it remains to be see how exchange traded funds (ETFs) will be impacted.
After being voted down earlier this week, the $700 billion package finally gained approval in the House, and every member voted, reports David M. Herszenhorn for the New York Times.
Treasury Secretary Henry Paulson has promised quick action to get the rescue plan officially up and running, reports Martin Crutsinger for the Associated Press.
The plan allows the Treasury to buy troubled debt from financial firms in order to ease the trouble caused by our financial crisis, including bank failures and tightening credit. There are other provisions attached to the bill in order to sweeten it for opponents, including tax breaks for renewable energy and protection for American family from paying the alternative minimum tax. The deal also calls for oversight by two boards, limits on executive pay and requires the government to take more steps to prevent foreclosures.
Taxpayers have some protections in the bill, as well: there’s a mechanism for the government to take an equity stake in the firms that seek help, giving taxpayers a chance to profit if the companies make money in the coming years.
If the plan has lost money after five years, there’s a provision that the president will have to submit a plan to Congress for recouping those losses.
Now that there’s a plan in place and on its way to full approval, it remains to be seen what the true impact will be. Some fear it will make a bad problem worse, others think it will put our economy back on track once again. We’re in for some interesting weeks and months ahead.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.