Another shocking day of financial drama in remains unsettled with increased confusion regarding the $700 billion bailout to save the nation’s financial system has any chance of making it through Congress. Meanwhile, lawmakers received another sign of the volatility of the U.S. financial system last night as federal regulators seized Washington Mutual and immediately sold the bulk of its operations to JP Morgan Chase in what amounted to the largest bank failure in U.S. history. WAMU is one of the nations’ largest mortgage lenders, but with foreclosure crisis worsening, the home loan defaults clearly took their toll on this financial giant. How it affects the WAMU customers and borrowers no one knows yet. Lending guidelines continue to get stricter so bad credit mortgage refinancing becomes even more difficult.
Today no one knows whether the breakdown in negotiations means the plan is doomed or if it just represents a brief stumbling block. The Los Angeles Times reports that, far away from the limelight, Republican and Democratic lawmakers were moving toward a compromise, “but it remained to be seen whether there would be enough votes to pass legislation.” If that sounds familiar it’s because that’s how things looked yesterday in the early afternoon when key lawmakers said they were well on their way to agreeing on the “fundamentals” of a deal. But then in the White House, a “verbal brawl” broke out in the Cabinet Room, according to the New York Times, and things quickly fell apart, which led to an eloquent declaration from President Bush: “If money isn’t loosened up, this sucker could go down.”
Apparently George Bush’s well delivered speech warning of financial pitfalls were not enough to save the plan after more quarreling heated up over “financial concerns, presidential politics and partisan rancor” resulted in “an unexpected Washington drama with the nation’s economic future hanging in the balance,” says USA Today. Who’s to blame for the breakdown? The Washington Post declared yesterday that a “renegade bloc of Republicans” managed to both surprise and anger administration officials as well as congressional leaders when they “moved to reshape” the bailout. The Wall Street Journal reports that talks are set to resume this morning “without House Republicans.” For the latest up to the minute home financing news, check out Mortgage News.
