The Wall St. street sign is photographed in front of the American flag hanging on the New York Stock Exchange prior to a NYC Central Labor Council rally for worker protections, Thursday, Sept. 25, 2008 in New York. (AP Photo/Mary Altaffer)
WASHINGTON (AP) -- Congressional leaders and the Bush administration agreed Sunday on the main elements of a $700 billion bailout for the financial industry, paving the way for swift enactment of the largest government intervention in markets since the Great Depression.
Negotiators sought to iron out the final shape of the legislation and it still had to be reviewed by House Republicans, whose fierce opposition to a federal rescue nearly torpedoed an emerging bipartisan pact late in the week. Officials in both parties said they hoped for a House vote Monday.
"We've still got more to do to finalize it, but I think we're there," said Treasury Secretary Henry Paulson, who participated in the talks at the Capitol.
The measure would create a program that lets the government spend unprecedented sums of public money to prop up tottering financial institutions by buying their sagging mortgage-based investments and other devalued assets.
A breakthrough came when Democrats agreed to incorporate a GOP demand - letting the government insure some bad home loans rather than buy them - designed to limit the amount of federal money used in the rescue.
Another important bargain, vital to attracting support from centrist Democrats and Republicans who are fiscal hawks, would require that financial firms repay the government for any losses. A leading proposal would impose a 2 percent tax on the companies if, after five years, the program had not made back what it spent.
"This is the bottom line: If we do not do this, the trauma, the chaos and the disruption to everyday Americans' lives will be overwhelming, and that's a price we can't afford to risk paying," Sen. Judd Gregg, the chief Senate Republican in the talks, told The Associated Press on Sunday. "I do think we'll be able to pass it, and it will be a bipartisan vote."
Congressional leaders, who announced the tentative deal after marathon negotiations that ended early Sunday, hope to have a House vote Monday; a Senate vote would come later.
The presidential nominees came behind the outlines of the bailout. "This is something that all of us will swallow hard and go forward with," said Sen. John McCain, R-Ariz. "The option of doing nothing is simply not an acceptable option."
Sen. Barack Obama, D-Ill., sought credit for taxpayer safeguards added to the initial proposal from the Bush administration. "I was pushing very hard and involved in shaping those provisions," he said.
Under the plan, the government would purchase mortgage-backed securities and other bad debts held by banks and other investors. The money should help troubled lenders make new loans and keep credit lines open. The government would later try to sell the discounted loan packages at the best possible price.
The legislation would place "reasonable" limits on severance packages for executives of companies that benefit from the rescue plan, said a senior administration official who was authorized to speak only on background.
The government would receive stock warrants in return for the bailout relief, giving taxpayers a chance to share in financial companies' future profits.
To help struggling homeowners, the plan would require the government to try renegotiating the bad mortgages it acquires with the aim of lowering borrowers' monthly payments so they can keep their homes.
"Nobody got everything they wanted," said Democratic Rep. Barney Frank of Massachusetts, chairman of the House Financial Services Committee. He predicted it would pass, though not by a large majority.
Gregg, R-N.H., said he thinks taxpayers will come out as financial winners. "I don't think we're going to lose money, myself. We may, it's possible, but I doubt it in the long run," he said.
Frank appeared on C-SPAN, Obama was on CBS' "Face the Nation," while McCain spoke on "This Week" on ABC.
Associated Press writer Holly Ramer in Concord, N.H., contributed to this report.