Bailout Package Will Get Passed, Bush Says

By: cnn.com
By: cnn.com

President Bush said Friday morning that Washington will come up with a rescue plan for the nation's economy despite disagreements that blocked a deal Thursday.

"We are going to get a package passed," he said. "We will rise to the occasion."

"There is no disagreement that something substantial should be done," Bush said.

Negotiations over the proposed $700 billion bailout of the nation's financial system are scheduled to resume Friday morning, but the plan's fate is far from certain.

The discussion resumes after a roller-coaster day of talks in which the Bush administration and Congress seemed tantalizingly close to a deal until last-minute objections from House Republicans.

"The legislative process is sometimes not very pretty," Bush said Friday.

House Republicans will not take part in negotiations scheduled to resume at 11:30 a.m. ET Friday, according to the leading House and Senate Democrats on the issue.

Instead, House GOP leaders are pushing a plan that they argue would not use taxpayer dollars, but it's a proposal that Treasury Secretary Henry Paulson has said would not work.

Rep. Barney Frank, D-Massachusetts, chairman of the House Financial Services Committee, said a bailout "just cannot happen" without the support of House Republicans.

The impasse left uncertain plans the first presidential debate, which is scheduled to begin at 9 p.m. ET Friday in Oxford, Mississippi. GOP nominee Sen. John McCain has suggested postponing it until a deal is reached, but Sen. Barack Obama, the Democratic nominee, has argued that the debate should go on.

McCain said Thursday night that he hoped "enough of an agreement" would be reached in time for him to fly to Mississippi to debate Obama, who said he plans to be there.

Democratic leaders questioned McCain's involvement in the House Republicans' opposition to the plan.

McCain had met with them Thursday before a White House meeting among Bush, congressional leaders and McCain and Obama meant to speed approval of an agreement.

It became clear at the meeting that there was a revolt in the president's own party.

Tempers flared, and just hours after some negotiators said they were close to a deal, negotiations collapsed.

Paulson, fearing a nose dive in financial markets in reaction, half-jokingly bowed on one knee to plead with House Speaker Nancy Pelosi to keep mum about the collapse, two senior Democratic aides said.

House and Senate leaders rushed back to Capitol Hill on Thursday evening for another session with Paulson. Sen. Christopher Dodd, D-Connecticut, said it brought "some good progress."

Frank, the lead House Democrat on the issue, said no House Republican took part in the negotiations, although Rep. Spencer Bachus, R-Alabama, attended for a short time and delivered a one-page statement outlining the House GOP plan.

"The House Republicans refused to participate," Frank said. "I think this is really extraordinary."

Bacchus told negotiators that House GOP leaders do not plan to attend the negotiations scheduled for Friday morning, Frank and Dodd said.

Dodd, chairman of the Senate Banking Committee, said Bush must get the House Republicans on board. Such backing is particularly important, he said, because the plan has wide support among Senate Democrats and Republicans, and House Democrats.

"We are not going to come to a conclusion on a three-legged stool here, missing the fourth leg," Dodd said. "And I know my colleagues are not going to go on up and vote on something with awareness that the House Republicans aren't participating."

Republican House members detailed their objections Thursday evening.

"We've been listening to the American people, and the American people have told us that they don't want to foot the bill," Rep. Judy Biggert, R-Illinois, said.

Instead, they issued a statement of economic rescue principles that calls for Wall Street to pay for the recovery by injecting private capital -- not taxpayer dollars -- into the financial markets. Easing tax laws would prompt investors to put in their own dollars, they said.

The plan also calls for participating firms to disclose the value of the mortgage assets on their books, ending Fannie Mae and Freddie Mac's securing of "unsound mortgages," reviewing the performance of the credit rating agencies and having the Securities and Exchange Commission audit failed companies to ensure their financial standing was accurately portrayed.

"It is a plan that frankly does not leave the American taxpayers with the bag and instead has and makes sure that it is Wall Street that will pay for this recovery," said Rep. Eric Cantor, R-Virginia.

Earlier, congressional negotiators from both parties said they had agreed to a set of principles on revisions to the administration's rescue plan, which calls for the Treasury Department to buy up bad mortgage securities from banks in an effort to get them to lend again.

The proposal, as amended by leaders in both chambers, would help homeowners, curb executive pay packages at participating firms and provide oversight of Treasury's actions, Dodd said in a lunchtime address.

The principles the Democrats said had been agreed upon call for Congress to make $250 billion available immediately with $100 billion available, if needed, without requiring additional congressional approval, said two senior Democratic aides familiar with the negotiations. The second half of $350 billion would then become available by a special approval of Congress.

On executive compensation, the draft would require limits on compensation for executives of any company participating in the bailout. These caps would apply for as long as the company is in the program. This would include some language to limit excessive "golden parachutes."

Treasury also will get an equity stake in the companies being helped by the bailout, though what type remains to be worked out.

On Wednesday, McCain said he was suspending his campaign to focus on the bailout talks.

Frank called McCain's attendance at the White House emergency meeting a "political ploy."

"He slowed down the process," Frank said. "He is making it harder for us to get things done."

Republican Sen. Lindsey Graham of South Carolina later defended McCain.

"This is all politics," he said. "If they'd spent half the time negotiating a deal rather than attacking Sen. McCain, we would be getting somewhere."

Graham accused Democrats of grandstanding earlier Thursday, when they held news conferences proclaiming that a deal was close.

"There was never a deal that had a snowball's chance in hell of passing," Graham said.


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