Congress restarts bailout talks
Vail, CO Colorado
WASHINGTON ” President Bush told Congress Friday it must “rise to the occasion” and pass legislation bailing out the struggling financial system, and new bargaining was arranged at the Capitol despite heavy bickering, especially within the Republican caucus.
Seeking to soothe frayed and weary lawmakers, Bush delivered a short statement from outside the Oval Office of the White House, acknowledging lawmakers have a right to express their doubts and work through disagreements on the $700 billion plan, but declaring they must work to avert an economic meltdown.
But in a sign of continuing division, House Minority Leader John Boehner demanded that “serious consideration” be given to a radically different proposal that provides no government money up front for a financial rescue.
“If such consideration is not given, a large majority of Republicans cannot ” and will not ” support” the administration’s plan, Boehner said in a letter to House Speaker Nancy Pelosi, D-Calif.
The legislation the administration is promoting would allow the government to buy bad mortgages and other rotten assets held by troubled banks and financial institutions. Getting those debts off their books should bolster those companies’ balance sheets, making them more inclined to lend and easing one of the biggest choke points in the credit crisis. If the plan works, it should help lift a major weight off the national economy that is already sputtering. But a significant number of lawmakers, including many House conservatives, say they’re against a publicly-financed bailout.
What caught some by surprise, either at a fractious White House meeting Thursday afternoon or shortly before it, was the sudden momentum behind a dramatically different plan drafted by House conservatives with Boehner’s blessing.
Instead of the government buying the distressed securities, the new plan would have banks, financial firms and other investors that hold such loans pay the Treasury to insure them. Rep. Paul Ryan, R-Wis., a chief sponsor, said it was clear that Bush’s plan “was not going to pass the House.”
But Democrats said the same was true of the conservatives’ plan. It calls for tax cuts and insurance provisions the majority party will not accept, they said.
Bush on Friday morning acknowledged “disagreements over aspects of the rescue plan.” But he also said “there is no disagreement that something substantial must be done. The legislative process is sometimes not very pretty. But we are going to get a package passed.”
White House press secretary Dana Perino later said: “We don’t have any reason to believe that we can’t get it done by Monday.”
Rep. Roy Blunt of Missouri, the No. 2 House Republican leader, was set to attend talks with key lawmakers, as was Treasury Secretary Henry Paulson, who has labored to keep agreement on the general outline of a plan from imploding. House Republicans earlier had boycotted bargaining on the emerging bipartisan plan, calling it unacceptable.
GOP Presidential nominee John McCain, who had said he was suspending his campaign to forge a bipartisan agreement, reversed course and planned to attend the previously scheduled debate Friday night with Democratic rival Barack Obama.
On Wall Street, the level of institutional nervousness was palpable, with stocks bouncing up and down, especially after Washington Mutual Inc. became the largest U.S. bank to fail. The Dow Jones industrial average initially fell while fears of a deepening economic crisis fed safe-haven buying in Treasury notes.
White House counselor Ed Gillespie said the administration was working with lawmakers on how some elements of the rival House GOP proposal could be incorporated into the package. “There are some things that may not work and some things that may work,” Gillespie said.
Democrats said they were confident legislation would ultimately be completed. “We’re going to get this done, and stay in session as long as it takes to get it done,” said Sen. Harry Reid, D-Nev., the majority leader.
Earlier, House Financial Services Chairman Barney Frank declared that an agreement depended on House Republicans “dropping this revolt” against the Bush-requested plan.
Democrats put the responsibility on Bush for getting a rescue package back on track.
“We need to get the president to get the Republican House in order,” Sen. Charles Schumer, D-N.Y., said on the Senate floor. “Without Republican cooperation, we cannot pass this bill.”
Schumer said Bush should also “respectfully tell Sen. McCain to get out of town. He is not helping, he is harming. Before Sen. McCain made his announcement, we were making progress.” Schumer was referring to McCain’s announcement earlier in the week that he was suspending his campaign to return to Washington for the negotiations on the financial industry crisis.
McCain met briefly Friday morning with Boehner, R-Ohio, before leaving Washington.
Bush decided to make his brief remarks Friday in hopes of projecting calm for both the markets and the talks that were to resume on Capitol Hill with key lawmakers and Paulson, Gillespie said.
Bush, whose style is usually to leave the personal lobbying to others, was on the phone repeatedly Friday with lawmakers, particularly House Republican leaders and rank-and-file, and planned to do so all day. Vice President Dick Cheney, who is particularly close with the conservative wing of the party, canceled a trip to devote the day to keeping in telephone contact with the Hill from his White House office.
The White House has seen the entire process as a delicate balancing act, between understanding the enormity of what Congress is being asked to do in such a short time and respecting its role as writers of legislation, while also keeping pressure in a time of crisis, Gillespie said.
He said Bush recognizes the urgency of bringing along House Republicans and understands that Democrats shouldn’t be asked to support any plan without their votes, too.
Reid made it clear that winning congressional approval of any rescue package will require Congress to delay a long-sought adjournment calculated to let lawmakers have five full weeks to campaign before the election.
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