I am very disappointed to read this in the NYT online.
At the same time, Congressional Democrats said they were prepared to drop one of their most contentious demands: new authority for bankruptcy judges to modify the terms of first mortgages. That provision, aimed at preventing foreclosures, was heavily opposed by Senate Republicans.
I hope it is not true. I have yet to read a convincing case for why banks should get all the windfalls for their evident stupidities. I do not like being asked to pay large sums of money for windfalls to the improvident, but given the choice between improvident families losing their homes and stock and bondholders in improvident banks, I know whose windfall I'd choose to hand my a share of my income to.
On a somewhat more cheerful note, it seems that the Dems might “only” hand over $150 billion, which might leave a little money for social programs in the Obama administration. Even though the $700 bn number was clearly made up, I suppose this will be about as small a number as they can get away with. Think what it could have done for health care.
If the Congress doesn't hold some sort of line on the amount, the GOP program of “starving the beast” — making the Treasury so broke that there's no danger Democrats could afford anything popular — would truly have reached its apotheosis.