Consumer confidence unexpectedly rose in September in a survey taken before the recent worsening of the credit crisis and plunge in stocks.
The Conference Board's confidence index increased to 59.8, a third consecutive increase, from 58.5 the prior month, the New York-based group said today. A separate report showed home prices fell in July at the fastest pace on record from a year earlier.
Since the confidence survey's Sept. 23 cutoff, the odds have risen that consumers will retrench in the wake of failing banks, evaporating wealth and paychecks that aren't keeping up with inflation. Stocks tumbled yesterday after the government failed to approve a financial-rescue plan.
“The environment has become pretty negative,'' said James O'Sullivan, a senior economist at UBS Securities LLC in Stamford, Connecticut, who had forecast confidence would rise. “The momentum has certainly turned down. If the turmoil continues, the risk of a severe recession goes up.''
Americans are likely to lose confidence heading into the presidential election on Nov. 4. Today's report is the next-to- last Conference Board sentiment reading before the vote.
Another report showed business activity slowed less than forecast this month. The National Association of Purchasing Management-Chicago's index fell to 56.7 in September from 57.9 the prior month. Fifty is the dividing line between growth and contraction.
Stocks Up
Stocks extended earlier gains following the reports and Treasury securities fell. The Standard & Poor's 500 index was up 3.2 percent to 1,142 at 10:15 a.m. in New York. The yield on the benchmark 10-year note rose to 3.69 percent from 3.58 percent late yesterday.
Equities rallied on expectations lawmakers would salvage the bank rescue package. The House of Representatives yesterday voted down a $700 billion plan intended to restore confidence in U.S. banks, sending the S&P 500 Index tumbling almost 9 percent.
The confidence gauge was forecast to drop to 55 from an originally reported 56.9 in August, according to the median forecast in a Bloomberg News survey of 62 economists. Projections ranged from 48 to 66. The index reached a 16-year low of 51 in June and averaged 103.4 last year.
Since the cutoff date, Washington Mutual Inc. joined Lehman Brothers Holdings Inc. in bankruptcy, Citigroup Inc. acquired Wachovia Corp. to prevent the collapse of the sixth-biggest U.S. bank by assets, and stocks suffered their biggest drop since 1987.
Home Values Drop
Earlier today, the S&P/Case-Shiller home-price index of 20 U.S. metropolitan areas dropped 16.3 percent in July from a year earlier, more than forecast, after a 15.9 percent decline in June. The gauge has fallen every month since January 2007, and year-over-year records began in 2001.
“The fact that house prices quickened their slide before the worst point in credit markets hit this month does not bode well,'' said Derek Holt, an economist at Scotia Capital Inc payday loan http://us-no-fax-payday-loans.com. in Toronto.
The Conference Board's measure of present conditions dropped to 58.8, the lowest since 1993, from 65 the prior month. The gauge of expectations for the next six months increased to 60.5 from 54.1.
“These results did not capture all of the tumultuous events in the financial sector this month,'' Lynn Franco, director of the Conference Board's confidence survey, said in a statement. “Until the dust settles a bit more, we will not know the full impact.''
Jobs Outlook
Temporary shocks usually have a detrimental effect on confidence for two to four months unless they are accompanied by job losses, she said.
The share of consumers who said jobs are plentiful dropped to 12.2 percent, the fewest in five years, from 13.5 percent last month, today's report showed. The proportion of people who said jobs are hard to get increased to 32.8 percent from 31.7 percent.
Compared with other sentiment measures, the Conference Board's index tends to be more influenced by consumer attitudes about the labor market, economists said. So far this month, 466,000 Americans a week on average filed first-time claims for unemployment benefits, up from 443,000 in August and 363,000 in the first six months of the year.
A report last week showed the Reuters/University of Michigan final sentiment reading for this month declined from a preliminary figure issued in early September as the credit crisis deepened. The reading was still up from August, reflecting the decline in gasoline prices, economists said.
Payroll Forecast
The economy probably lost another 105,000 jobs in September, the ninth consecutive monthly decline, according to the median estimate in a Bloomberg survey ahead of a Labor Department report due Oct. 3. Payrolls dropped by 605,000 workers in the first eight months of the year.
Job cuts may swell as the effects of the financial meltdown ripple through other industries. Fewer jobs and less-available credit indicate consumer spending, which accounts for more than two-thirds of the economy, will weaken further.
Fewer Americans were able to obtain an auto loan this month, according to CNW Marketing Research in Bandon, Oregon, which analyzes auto-industry data.
“Given the relatively weak state of the economy, that's obviously impacting the consumer's ability or willingness to come out and buy a new car,'' General Motors Corp. Chief Executive Officer Rick Wagoner said in a Bloomberg Radio interview on Sept. 25 from Flint, Michigan.
Consumer spending this quarter will be unchanged, the weakest performance since 1991, according to the median estimate in a Bloomberg survey earlier this month.
Washington Mutual Chief Executive Alan Fishman could walk away with more than $18 million in salary, bonuses and severance after less than three weeks on the job, according to the terms of his employment agreement.
But will Fishman follow the lead of another troubled financial firm and turn his severance package down?
JPMorgan Chase (JPM, Fortune 500) grabbed up the banking assets of WaMu on Thursday after federal regulators seized the company, making it the largest bank failure in history.
JPMorgan Chase CEO Jamie Dimon said in a conference call with reporters Friday that no decisions have been made about the fates of WaMu senior executives.
Still, the demise of WaMu is likely to be the end of Fishman’s brief tenure at the helm.
Fishman was hired on Sept. 7, replacing former long-time CEO Kerry Killinger, who was ousted as a result of the company’s many financial woes.
WaMu did not reply to requests for comment about Fishman’s severance package. But some details were outlined in his employment agreement, filed with the Securities and Exchange Commission on Sept. 11.
Fishman had a base annual salary of $1 million, which translates to $19,230 per week. So during his three weeks on the job, he would receive a base pay of about $60,000 before taxes.
His target annual bonus was 365% of his salary, or $3.65 million. In the agreement, it was unclear how much of the annual bonus he would be eligible for, if any.
The agreement said that Fishman could be eligible in 2009 for a long-term incentive award, which would be worth at least $8 million. But the agreement also said this is based on the assumption that would serve as CEO for the "full year" of 2009.
Also, if Fishman has to pay taxes because of any severance he receives as a result of the takeover, then the company would cover those taxes. That would potentially give Fishman millions of dollars more.
Fishman also got a multi-million dollar sign-on bonus. But he may have to pay it back, depending on certain conditions outlined in the agreement.
Fishman’s sign-on cash bonus was $7.5 million as well as 612,500 shares of WaMu, which are now virtually worthless. Shares of WaMu plunged more than 90% to 16 cents a share on Friday.
The agreement says that Fishman would have to pay back part or all of his bonus if he ends his employment for any reason other than "constructive termination," or if the company terminates his employment with "cause."
If Fishman is terminated without "cause" - which could mean the loss of a job due to a takeover of the firm - or if he resigns because of "constructive termination," than he would receive a lump severance payment of $6.15 million http://paydayloans-on.com guaranteed payday loans. This figure is 2.5 times his base salary of $1 million plus the maximum bonus of $3.65 million.
The agreement did not specify constructive termination, but it is generally characterized as an employee voluntarily quitting because of intolerable working conditions.
When you add up his salary, the possible bonuses and the lump sum payment, Fishman could walk away with more than $18 million.
But the CEO of another prominent financial firm in a similar situation recently decided to turn down his severance package after the firm essentially collapsed.
Robert Willumstad, former chief executive officer of insurance giant AIG (AIG, Fortune 500), which the government took an approximately 80% stake in after giving it an emergency $85 billion loan, was dismissed last week after only about three months on the job.
Willumstad has reportedly told his successor that he has decided not to accept his $22 million severance package since AIG shareholders and employees had lost so much money as a result of its meltdown.
Matt McCormick, portfolio manager with Bahl & Gaynor Investment Counsel, said he thinks that Fishman will not be rewarded extravagantly given that the bank failed.
"I will give WaMu the benefit of the doubt that they hired this person to make WaMu work, not to get foreclosed," he said.
But McCormick added that the WaMu failure wasn’t necessarily Fishman’s fault, because "their goose was cooked long ago."
In the future, employment agreements for CEOs might include more details on restricting multi-million dollar bailouts after brief tenures, McCormick said.
As the White House and Congress hammer out the details of a rescue plan for embattled financial institutions, Americans worry that it may reward bad behavior but they also fear that doing nothing may hurt the economy, according to a poll released Tuesday.
In a CNN/Opinion Research poll, 79% of 1,020 respondents said they were worried that the economy could get worse if the government takes no action.
However, 77% also said they believed that a government bail-out would benefit those responsible for the economic downturn in the first place. The poll was taken on Sept. 19-21 and had a margin of error of plus or minus 3 percentage points.
The Bush administration, under the guidance of Treasury Secretary Henry Paulson, has proposed that the federal government buy up approximately $700 billion in problematic assets from financial institutions in order to give them the liquidity they need to stay afloat.
Democratic lawmakers have pushed for a number of additions to the bill, including additional oversight, protections for homeowners and caps on executive compensation.
According to the CNN poll, fully half of respondents said there is too little regulation of the stock market and financial institutions.
The two presidential candidates, Democrat Barack Obama and Republican John McCain have also said there needs to be more government oversight of the bailout plan.
Through it all, Americans remain optimistic cheap payday loans http://abc-cashadvance.com. While a great majority said they believed the economy was struggling, according to the poll, more than two-thirds said they thought the economy would be in good shape a year from now.
European Central Bank Governing Council member Ewald Nowotny said there is no need for the ECB to change borrowing costs any time soon.
“The current level'' of interest rates “is adequate to ensure price stability over the medium-term,'' Nowotny, who is also head of Austria's central bank, said in an interview today in Bratislava, Slovakia. “The ECB follows a steady-hand policy, this has proven itself.''
The ECB earlier this month kept its benchmark lending rate at a seven-year high of 4.25 percent to fight inflation even as the economy cools. While the ECB along with the world's largest central banks has pumped cash into money markets over the past week to ease a credit squeeze, Nowotny said that he doesn't see “any reason'' for Europe to adopt similar measures to the U.S.
The central banks sought to soothe money markets after last week's collapse of Lehman Brothers Holdings Inc. and the U.S us fast cash easy payday loans. government's takeover of American International Group Inc. threatened to derail financial markets. That led to the unveiling of the U.S. government's $700 billion rescue plan to restore confidence.
“Europe can't be compared with the U.S. Our financial system is inherently more stable,'' said Nowotny, who joined the ECB governing council last month. “We have to remain cautious. It is to be hoped that the massive intervention by the U.S. government has a stabilizing effect.''
Nowotny today reiterated that the ECB has “no bias'' when it comes to interest rates. While it is a “realistic goal'' to expect inflation to fall below the ECB's 2 percent limit by 2010, the bank will monitor wage developments “with great alertness and some concern,'' he said.
Treasury Secretary Henry Paulson pressed his case for an unprecedented $700 billion bailout of financial markets on Sunday as negotiations over the plan opened between the administration and Congress.
The sweeping proposal would have the Treasury buy up bad mortgage-related debts from financial institutions, including U.S. subsidiaries of foreign banks, to try to stem the worst financial storm since the Great Depression.
Two key questions, however, remained unanswered even after Paulson appeared on four national television talk shows. What price will the United States pay for these toxic debts, which spawned a global credit crisis. When will it start buying them?
Paulson painted the proposed intervention into private markets as a necessary evil, arguing the consequences of inaction would be so dire that the large burden taxpayers would shoulder would be worth it.
“This is not something that we wanted to do faxless payday loans freecreditreport. This was something that was very necessary,” Paulson said on the NBC Sunday program “Meet the Press.”
“We did this to protect the taxpayer.”
LAWMAKERS VOW SWIFT ACTION
New York Sen. Charles Schumer, a member of the Democratic leadership, said Democrats would not load up the bill with numerous extraneous provisions and said a measure to give a lift to the economy would likely be moved separately.
It was a "bailout bounce" for the history books that capped a chaotic week for global stocks.
Toronto’s main equity index rollicked yesterday in its biggest relief rally since the "Black Monday" crash of 1987 after the United States took radical steps to restore confidence in jittery credit markets while regulators snuffed out short-selling in volatile financial stocks.
The S&P/TSX composite index shot up by 7.03 per cent – a whopping 848.42 points – to close at 12,912.99. The benchmark index actually recorded a gain of more than 140 points on the week, despite days of stomach-churning gyrations.
On Wall Street – ground zero for the global financial crisis – the blue-chip Dow Jones industrial average surged by 368.75 points to 11,388.44. Morgan Stanley and Goldman Sachs Group Inc. helped lead the charge in financial stocks after U.S. Treasury secretary Henry Paulson and Federal Reserve chair Ben Bernanke announced a sweeping plan to halt the credit-market seizure. U.K. and U.S. regulators, meanwhile, cracked down on short sellers, investors who bet on share-price declines in financial firms.
In fact, markets around the world cheered the bailout plan by U.S. officials, which aims to ease banks’ credit woes by taking toxic assets off their balance sheets. London’s FTSE 100 Index posted a record advance and Russia’s RTS Index jumped 22 per cent after a two-day trading halt. Russian stocks were also buttressed by President Dmitry Medvedev’s pledge to prop up its banks.
Some analysts, however, suggested the jubilance would be short-lived. Seattle hedge-fund manager Bill Fleckenstein predicted the U.S. government’s moves are bound to fall flat given the weighty problems plaguing the world’s biggest economy.
"They’re not going to fix the fundamental problem that the homeowner has a house he can’t afford. The economy is weak and getting weaker," he said. Fleckenstein has long warned about many of the problems, such as unrealistic real estate prices and excessive consumer and government debt, now plaguing the United States. He argues there was a "complete abdication of responsibility on the part of regulators."
With U.S. taxpayers now on the hook for the failures of various financial institutions, "the prudent are being asked to bail out the reckless" and the government budget deficit will soar paydayloans free credit report without a credit card. While measures taken over the past week could ease the credit crunch, the after effects will spread. "The next problem is going to be the real economy," he said.
Jack Ablin, chief investment officer with Harris Private Bank, said the government’s plan to establish a new entity to buy troubled assets from banks is welcome news but will be "costly." He also cautioned "this does not represent a catalyst to a new bull market …"
Yesterday, however, Bay Street took its cues from Wall Street. The TSX financial sector gained more than 5.72 per cent as investors bid up shares of banks and insurance companies.
Shares of Royal Bank of Canada shot up $3.44 (Canadian) to $51.43, while stock in insurance giant Manulife Financial Corp. jumped $1.53 to $36.87.
The U.S. Securities and Exchange Commission has named both RBC and Manulife on a list of 799 financial stocks that investors are now barred from short selling on American markets. Other Canadian companies on the list include the Bank of Nova Scotia, Fairfax Financial Holdings Ltd., Sun Life Financial Inc. and Kingsway Financial Services Inc.
After the close of financial markets, the Ontario Securities Commission issued a temporary order prohibiting short selling of securities of certain financial firms that are listed on the TSX and also inter-listed in the United States.
The affected companies include Bank of Montreal, Bank of Nova Scotia, Canadian Imperial Bank of Commerce, Fairfax Financial Holdings Ltd., Kingsway Financial Services Inc., Manulife, Quest Capital Corp., Royal Bank, Sun Life Financial Inc., Thomas Weisel Partners Group Inc., Toronto-Dominion Bank, and Merrill Lynch & Co. Canada Ltd.
The Bank of Canada, meanwhile, took more steps to lubricate credit markets by lending commercial banks and brokers $2 billion for 28 days.
Elsewhere, Prime Minister Stephen Harper stressed that no government bailouts of this country’s banks are being considered because they’re still in "very good shape."
That drew the ire of New Democrat Leader Jack Layton, who said the government must play a stronger role in the economy.
With files from Joanna Smith and the Star’s wire services
The Federal Reserve and Treasury began a series of emergency measures to prop up the mortgage and money markets ahead of congressional action on a broader lifeline for the U.S. financial system.
The Treasury plans to double its purchases of mortgage- backed debt to $10 billion and use a $50 billion fund to insure against losses on money-market funds. The Fed plans to extend emergency loans to banks to purchase asset-backed commercial paper from money funds, and to buy short-term debt from Fannie Mae, Freddie Mac and other agencies.
Today's announcements are aimed at combating a record exodus of investors from money-market funds, long considered to be among the safest investments. The actions come before an expected congressional passage of a new entity that would remove illiquid mortgage securities from companies' balance sheets.
“This is a situation where they could not be reactive because a run on money markets would have material consequences for investor sentiment,'' said Tony Crescenzi, chief bond market strategist at Miller, Tabak & Co. LLC.
The U.S. Treasury said it will use funds from the government's Exchange Stabilization Fund to insure for a year holdings of publicly offered money-market funds that pay a fee to participate in the program. Retail and institutional funds are eligible, the department said today in a statement.
Government Takeover
Treasury Secretary Henry Paulson said Fannie Mae and Freddie Mac, the mortgage-finance firms that government took over last week, will increase their purchases of mortgage-backed securities and the Treasury will “expand'' its own mortgage buying program.
Treasury spokeswoman Brookly McLaughlin said the department will buy $10 billion of mortgage securities, up from an initial $5 billion plan for the first month of the program. Any purchases after that remain to be determined, she said.
Mortgage assets that aren't trading and difficult to value are “choking off'' credit that the economy needs, Paulson said today.
The Fed will extend loans to banks to purchase “high- quality'' asset-backed commercial paper from money market funds, the central bank said. The Fed will also buy short-term discount notes issued by Fannie Mae, Freddie Mac and the Federal Home Loan Banks from Wall Street dealers. Neither program has a set limit.
Investor Shift
“The market for agency discount notes has been disrupted particularly by the shift of some investors to Treasury-only money market mutual funds, which do not invest in agency discount notes,'' New York Fed spokesman Andrew Williams said in an e-mail message. “As a result of this shift, other money market mutual funds have apparently attempted to sell large volumes of agency discount notes, further reducing liquidity in this market.''
The Fed purchased $8 billion of short-term federal agency debt under the new program today instant cash advance cash advance usa.
Yields on the debt relative to U.S. Treasury bills tumbled the most in at least 10 years today. The spread for 90-day agency notes dropped 96 basis points to 122.6 basis points at 5:15 p.m. in New York, according to data compiled by Bloomberg. The spread had jumped from 78 basis points at the end of last week.
The actions came a day after Paulson and Fed Chairman Ben S. Bernanke met with congressional leaders to urge moving troubled assets from the balance sheets of U.S. financial companies into a new institution, the most sweeping action aimed at ending the crisis.
Investors pulled a record $89.2 billion from money-market funds on Sept. 17, according to data compiled by the Money Fund Report, a newsletter based in Westborough, Massachusetts.
Federal insurance may distort the market if left in place for a long period, Crescenzi said. “It will be very hard for the Treasury to strip the guarantee if investors get used to it.''
The Fed loans, with terms up to 270 days, will be at the discount rate, the Fed said. The rate is currently 2.25 percent.
`Competitive Auctions'
The New York Fed will conduct the purchases of debt through “competitive auctions'' over the “next several weeks,'' the Fed district bank said in a statement.
Prime money-market funds hold about $230 billion in asset- backed commercial paper that banks can buy with Fed funds and $69 billion of the agency debt, senior Fed staff officials told reporters on a conference call. The staffers spoke on condition of anonymity.
The Fed said it allowed banks to buy commercial paper from affiliated money market funds and exempted banks from capital requirements related to holding the paper.
The loan program will run through Jan. 30, the officials said. There is no end date for the agency debt purchases, they said.
The Fed officials said they believe the central bank and taxpayers are protected because the commercial paper is backed by assets. The loans are non-recourse, meaning the Fed doesn't have additional rights to banks' assets should the collateral's value decline, the officials said.
The Fed invoked emergency lending authority to aid the mutual funds through banks, the officials said.
The latest move by the Fed appeared to work - for a few hours at least.
The announcement early Thursday morning that the Federal Reserve and several other foreign central banks were injecting $180 billion of cash into the market - on top of the $67 billion provided earlier this year - is the Fed’s latest attempt to restore faith in the financial system.
The move follows the Fed’s fevered, but ultimately failed, talks over the weekend to try and save Lehman Brothers (LEH, Fortune 500), the decision on Tuesday to hold interest rates steady and Tuesday night’s stunning $85 billion loan to insurer AIG (AIG, Fortune 500).
Unlike those actions, the cash infusion seemed to soothe investor fears, albeit temporarily. U.S. stock markets all shot up Thursday morning, following a rise in European stock markets.
But how long this sense of relief lasts is anybody’s guess. In fact, stocks turned south by early afternoon before heading higher again.
Clearly, the move to put more money into what are, to put it mildly, fragile markets is a good thing.
Still, some wonder if the confidence boost will be fleeting as investors continue to speculate about who the next financial bailout or bankruptcy might be.
"I think this helps. Liquidity is an issue," said Phil Dow, director of equity strategy with RBC Wealth Management in Minneapolis. "But trust has to be earned and that doesn’t happen overnight."
Even though this morning’s rally faded away around noon before resuming again later in the day, it’s important to point out that, regardless of what happens with stocks, the new round of cash could lead banks to finally begin lending to one another again.
"This is a focused, well coordinated and well targeted action aimed at dealing with the unfortunate fact that private sector financial institutions worldwide are unwilling to lend to each other," said Daniel Alpert, managing director of Westwood Capital, a New York-based investment bank.
Alpert explained that the Fed and other central banks "did exactly what they needed to" since the deepening credit crisis has caused banks across the globe to seize up as fears spread that nobody is immune.
"This week left banks scrambling for the life-sustaining plasma of overnight funds, because now every institution is concerned - with a lot more justification than in prior months - that every other institution is about to go down - including themselves," he said.
Without doubt, the collapse of Lehman and AIG, combined with Merrill Lynch’s (MER, Fortune 500) decision to sell out to Bank of America (BAC, Fortune 500), has caused all major financial institutions to rapidly rethink what the banking landscape will look like in the next few months.
So the deal making in the sector is probably not even close to being over…as evidenced by the published reports indicating that Washington Mutual (WM, Fortune 500) is shopping itself and that Wachovia (WB, Fortune 500) is talking to Morgan Stanley (MS, Fortune 500).
"People are scared to lend anyone money easy quick payday loans payday loan cash advance loan. Nobody’s sure who is safe and who isn’t," said David Wyss, chief economist with Standard & Poor’s. "So we are going to have to see more consolidation take place and people have to feel more confident about lending to each other."
Don’t get me wrong. The addition of $180 billion may help unfreeze the credit markets. And that is sorely needed.
But a new era on Wall Street is beginning…and even with the help of the Fed, it’s too late to undo the damage that’s already been done. Some big brand-name banks have died and more will do so.
The best the Fed can hope for now is to stop the bleeding and let the strongest firms on Wall Street figure out how to make the pieces in the merger puzzle fit.
AIG is out of the Dow: Finally, a quick comment on AIG being booted from the Dow Thursday morning. Kraft (KFT, Fortune 500) is replacing it. As I wrote on Monday, this had to happen but I’m surprised that the folks at the Wall Street Journal didn’t use this an excuse to kick out other companies in financial distress, such as GM (GM, Fortune 500).
Still. I’m going to do my best Stephen Colbert now and gloat that I called it! I said back in June and that Kraft was a great candidate for the Dow. Ok. Gloating over.
Gap Inc. is gaining international ground with new franchise agreements to open stores in Mexico, Egypt and Jordan.
The new agreement brings to 21 the number of countries with approved Gap franchisees. The first franchisee was signed in January 2006, and over 100 franchised Gaps and Banana Republic stores are now open in 13 countries.
In Mexico, Gap (NYSE: GPS) will open stores within stores at a Mexican department store chain through a partnership with Distribuidora Liverpool. Gap products will become available in spring 2009.
Gap Inc. will also expand its Middle East presence with franchised Gap and Banana Republic stores in Egypt and Jordan. Fawaz Alhokair Group will open the first Gap stores in Egypt and Jordan by the end of the year, with Banana Republic stores following in 2009 credit scores cash advance. Fawaz Alhokair also has franchised Gap and Banana Republic stores in Saudi Arabia.
Gap and Banana Republic franchise stores are now open in Bahrain, Greece, Indonesia, Korea, Kuwait, Oman, Qatar, Malaysia, Saudi Arabia, Singapore, Philippines, Turkey and United Arab Emirates. The company has also announced franchise agreements to open stores in Bulgaria, Croatia, Cyprus, Romania and Russia over the next five years.
The House of Representatives on Tuesday approved an energy bill that could clear the way for more drilling in the United States, as the Democrats who control Congress yielded to pressure from Republicans on the issue.
But the bill, which passed 236-189, contains provisions Republicans do not like, including a repeal of tax cuts for the oil industry and a lack of incentive for states to allow drilling on their land.
"It’s time for an oil change in America," House Speaker Nancy Pelosi, a California Democrat, told reporters Tuesday. She contrasted her party’s plan with "the status quo, which is preferred by Big Oil" and the Bush administration, "or change for the future to take our country in a new direction."
She insisted that Republicans "must set aside their drill-only mentality."
Rep. Mike Pence, an Indiana Republican, called the Democratic bill "a charade," denying it would do what its backers claim.
"This is not ‘yes’ to drilling. This is ‘yes, but,’" he argued.
"This is ‘yes, but no drilling in Alaska, no drilling in the Eastern Gulf, no drilling inside 50 miles.’ This is ‘yes, but no litigation reform that will prevent radical environmental attorneys from tying up leases even before a single shovel of dirt is turned.’"
The Democratic bill would allow drilling between 50 and 100 miles offshore, as opposed to the three-mile line favored by Republicans. It would require states to give their permission for drilling on their land freecreditreport faxless payday loan. It would also include incentives for renewables, require the government to release oil from its emergency reserve, and force oil companies to drill on federal lands they already lease from the government.
Democrats and Republicans traded harsh words on the House floor Tuesday in the debate over the bill.
Rep. Anthony Weiner, D-N.Y., said President Bush’s "idea of an energy policy is holding hands with the Crown Prince of Saudi Arabia, embracing him with a big smooch."
When the Republicans "controlled Congress, [they] passed their own energy bill, signed into law by the president. We got into this mess," the New York Democrat said.
But Rep. Jeb Hensarling, a Texas Republican, shot back that the Democrats’ bill is a "sham" and a "fraud."
"This is a bill designed to ensure Democrats’ re-election, not designed to ensure affordable energy in America," he said.
He also complained about how the bill was brought to the floor: "No amendments, no substitutes, no committee hearings. Is this democracy? No."
The Senate could vote on various energy proposals, including more offshore drilling, as early as this week.
– The Associated Press contributed to this report.
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