US looking to President and Nominees to push bailout plan

Dire times call precisely for dire measures, and the proposed US Government bailout of the Financial Crisis is certainly one of those times. A crisis which has been called one of, if not the worst financial implosions in history. President George W. Bush went on Television to reassure Americans and to pledge support of the historic $700Billion plan to rescue the financial system and the markets.

Bush, also planned meetings with candidates Barack Obama and John McCain to detail, not only the urgent need for passing the proposed bill, but also to outline a strategy for moving forward to sustain economic activity. And furthermore to appeal to the American people that such a drastic monetary package is necessary to avoid a long and likely complete economic slowdown, the likes of which not seen in decades. The word collapse has been thrown around far to often in these discussions but it strikes an important chord as the emphasis on the swift approval of a bailout is seen as vital for market recovery.

Treasury Secretary Henry Paulson, a former Goldman Sachs (GS) chief, was the driving force behind the broad outline of the bailout plan and negotiations with lawmakers on Capitol Hill have been ongoing for days now. As these talks languish, in turn so do the buying trigger fingers of the investor community. President Bush speaking to the population is a direct result of the waning attitude towards the bailout package and its needed swift passing.

While the Dow experienced a two day gain of nearly 1000 points following the announcement of the Bailout proposal, the sentiment has been mixed since. The old adage of 'When government gets to talking the whole process stalls' had been floating around, while it may be unfair to pigeonhole that complaint here, it still provides the media a talking point. Something this drastic and this complex needs to be thoroughly discussed and with issues ranging from individual consumer tax protection, executive compensation, and specific borrowing terms there is bound to be differences of opinion in any Congressional discussion on these topics.

Today's news brings with it the optimism that the bailout package is just about complete, and all major details have been worked out. To that end, the Dow and the other majors are seeing Bullish activity. This morning, the Dow averaged stood higher by almost 200 points (1.8%), with equal percentage gains also present in the Nasdaq and S&P.

Fannie and Freddie plunge as Government takeover confirmed

US Treasury Secretary Henry Paulson announced Sunday that both Fannie Mae (FNM) and Freddie Mac (FRE) were being placed under government-operated conservatorship.  The executive branch was ousted and dividends eliminated.  Not good news for the embattled mortgage dealers whose hands are tied into about half of the nation's $12Trillion in mortgage debt.

The news sent stock soaring this morning, led by the Financial sector, as investors saw this as the "beginning of the end" of mortgage related turmoil in the US. While the banks led the Dow to an over 200 point gain out of the gate, the Tech-heavy Nasdaq lagged behind, by midday being up only a third of a percent.

While banks like Citigroup (C), and Bank Of America (BAC) were enjoying gains of 4 or 5% the same could not be said for Fannie and Freddie. The selling off was swift, and very ruthless with Fannie dropping 83% and Freddie following closely behind down 79% by midday.

While Investors assumed the worst case scenario for F & F, even the US Treasury was unable to put a price tag on the bailouts. Paulson came on television earlier Monday and admitted that the final cost is an unknown and will depend on several factors including the ultimate turnaround of the housing market. At least one estimate by William Poole (St. Louis Federal Reserve Bank President) has the bailout costing about $300Billion, according to Forbes.

A hefty price tag indeed, but certainly not something any Investor of the F & F twins surely will be to happy about.

Disclosure: Author does not own FRE or FNM