US President George W Bush said Congress would resolve any disagreements and approve a financial rescue, as the top Senate Democrat vowed Congress would stay in session until a deal is reached.
“We are going to get a package passed,” Bush said in a statement at the White House today. “We will rise to the occasion, where Republicans and Democrats will come together and pass a substantial rescue plan.”
Senate Majority Leader Harry Reid, a Nevada Democrat, said this morning that he saw “progress” in negotiations and that an agreement was possible.
“We’re going to get this done and stay in session as long as it takes,” Reid said at a news conference on Capitol Hill.
Democrats are circulating a draft of legislation that contains limits on executive compensation and ensures Congress has oversight over any taxpayer money used in the bailout, Reid said. An agreement could be drawn up today or tomorrow and a vote held “this Sunday or Monday,” he said.
Meetings to Resume: Lawmakers planned to meet again today in Washington after some House Republicans, led by Virginia’s Eric Cantor, said yesterday that they wouldn’t back a $700 billion rescue plan put forward by Treasury Secretary Henry Paulson. House Republicans announced they would participate in the talks that now include House and Senate Democrats, Senate Republicans and administration officials.
“I have asked House Republican Whip Roy Blunt to represent the interests of House Republicans during the discussions,” House Minority Leader John Boehner said in a statement.
A top Senate Republican, though, said he is willing to delay any bailout package and let markets open next week without a relief package in place.
“We need to get back to the drawing board,” Alabama Senator Richard Shelby, the top Republican on the Senate Banking Committee, said on MSNBC. “We need to consider this in a deliberate, linear fashion.”
Yesterday, Republican lawmakers offered a plan calling for Wall Street firms to purchase insurance on mortgage-backed securities and advocating tax cuts and relaxed regulations. Treasury officials had previously rejected a plan focusing on insurance in favour of one that purchased troubled assets, Cantor said.
Republican Proposals: Ed Gillespie, senior counsellor to the president, said some of the Republican proposals “can be accommodated, possibly.” Bush will rely on the recommendations from Paulson and Federal Reserve Chairman Ben Bernanke whether the modifications are workable.
“We look at everything through a prism of ‘will it work’ and ‘can we get it done,’ and if it meets those two tests, then we’ll be for it,” Gillespie said.
The administration is trying to make “some adjustments, some tweaks” to lure opponents, he said.
The stalemate followed an unprecedented meeting at the White House with Bush, presidential nominees Republican John McCain and Democrat Barack Obama, congressional leaders and Cabinet officers.
Reid said today that McCain’s decision to return to Washington from the campaign trail contributed to derailing an agreement that had been reached yesterday afternoon.
‘Presidential Politics’: “The insertion of presidential politics has not been helpful, it’s been harmful,” he said.
Obama said he talked this morning with Paulson, Reid, House Speaker Nancy Pelosi of California and Senate Banking Committee Chairman Christopher Dodd of Connecticut and has spoken with some congressional Republicans over the past day.
Obama said today that he is “optimistic that we can get something done.” Speaking to reporters on his campaign plane, as he travelled to Mississippi for tonight’s presidential debate, he said, “I think there is real progress being made.”
The McCain campaign, meanwhile, announced that the Republican would participate in the debate. Earlier this week, he suspended his campaign to focus on the crisis, and said his attendance at the debate was in doubt.
The uncertainty over the rescue package unnerved investors, and followed the government’s announcement of the takeover of Washington Mutual Inc, the largest US savings-and-loan institution. Standard & Poor’s 500 stock index declined 1.2 per cent to 1194.39 as of 10:18 am.
Getting on Board: “I’m hopeful the worst of the crisis may be behind us if we can get Congress on board with the package,” Stephen Roach, chairman and acting chief executive of Morgan Stanley Asia Ltd, said in an interview in Beijing. “The government’s role is to stop a crisis from turning into a catastrophe.”
After a meeting last night on Capitol Hill, House Financial Services Committee Chairman Barney Frank and Dodd said some progress in negotiations had been made. They said House Republicans needed to participate for a plan to pass Congress.
Vice-President Dick Cheney cancelled trips to New Mexico and Wyoming today to help broker a bailout agreement.
The Republicans’ plan is “not serious,” Frank told CNN today. Frank also blamed McCain for making a dramatic announcement to suspend his campaign and return to Washington for the talks, saying that threw off the balance of the negotiations.
Support for Paulson: The White House yesterday issued a statement saying Bush still “supports the core of Secretary Paulson’s plan.”
Frank said Democrats have been working with Paulson to address several issues, such as executive compensation, accountability, foreclosures and some kind of warrants provision to provide taxpayers an equity stake in the companies that get rescued.
“On all of those, the secretary to his credit has now agreed in principle, and we are working how to do it,” Frank told reporters after meeting Paulson last night. “There will ultimately be $700 billion available, but how soon and with what other steps, are still being debated.”
Pelosi won’t push through legislation backed by a Republican administration without Republican support, Frank said.
“ Pelosi will not bring a partisan bill to the floor,” Frank said. “If the House Republicans continue to reject the president’s approach then there is no bill.”
Insurance Fund: The plan circulated by Cantor calls for a mortgage-backed security insurance fund, rather than taxpayer-funded purchases of those securities. The plan asks the Treasury to design a system to charge premiums to mortgage-backed security holders to finance this insurance, according to a fact sheet.
Republicans also seek to “remove regulatory and tax barriers that are currently blocking private capital formation.” It also suggests that regulators call on financial institutions to suspend dividends, along with other steps to address liquidity problems.
Cantor said the House Republican proposal “does not leave the American taxpayers with the bag and makes sure that Wall Street pays for this recovery.”
Representative Jeb Hensarling of Texas said it shouldn’t be “Paulson’s plan or no plan.”
The Republican revolt reflects popular dissatisfaction with Wall Street bailout.
Voter Opposition: Calls to congressional offices are “running 50 per cent ‘no,’ and 50 per cent ‘hell, no,”’ Democrat Paul Kanjorski told CNBC today. “Out of 100 calls, you are lucky if one of them is positive.”
At the White House meeting earlier yesterday, Paulson, on his knee, asked Pelosi not to allow the negotiations to blow up, according to a participant in the meeting.
Democrats blamed McCain for initiating the meeting, which they said slowed down the pace of negotiations.
Dodd said on CNN that the Republican plan threatens to force negotiations to begin anew. He said the White House meeting “looked like a rescue plan for John McCain for two hours, and it took us away from the work we were trying to do today.”
McCain met with Boehner this morning. McCain’s campaign said yesterday that more negotiations were needed to draft legislation that would pass Congress.
“There is not yet a majority of Democrats and Republicans who are willing to vote yes for anything,” said Steve Schmidt, a senior adviser to McCain’s campaign.
