Countdown to Financial Stimulus

President Barack Obama is poised to sign the $787 billion financial stimulus package Tuesday afternoon in Denver, Colo. The package includes more than $7 billion for a high-speed internet expansion project to connect rural areas with faster communication and increased business potential. It also includes expanded unemployment benefits and funds for a first-time home buyer tax credit. Congress has claimed from early versions of the package that every $1 invested will bring a $10 return in economic growth. It’s also the longtime claim from Democratic supporters the package will save or create 3.5 million jobs in the next several years. An eleventh-hour provision added as the stimulus passed a Congress vote Friday will further restrict bonuses for top executives at financial institutions receiving bailout funds. The provision would work retroactively on firms that have already received funds as well as going firms with current transactions. The new amendment — introduced by Senator Chris Dodd, D-Conn. — would limit executive bankers’ bonuses to a third of total compensation to be paid in stock that cannot be sold until the firms repay government funds. The bill passed House and Senate votes late Friday, with Democrats carrying the House victory 246 to 183 and no Republicans supporting the bill. Seven House Democrats opposed the bill. Hours later, Senate Democrats and three Senate Republicans passed the bill 60 to 38. Treasury Department secretary Timothy Geithner on Friday attended the G7 Finance Minsters and Central Bank Governors meeting in Rome, where he assured the group of leaders the United States is moving swiftly to revive the economy by way of the economic stimulus package and bank stabilization plan — the details of which are expected to be presented soon. Geithner urged other countries to take bold actions as well. People close to the situation told the Financial Times that financial groups were frustrated by the administration’s decision not to hold detailed talks with the industry before releasing its financial rescue plan. Administration officials said the announcement was meant to serve as a framework, and stressed that industry “stakeholders” would be consulted as details were hashed out. Write to Diana Golobay at [email protected].