Lawmakers Hope To Vote On Deal In Days

Lawmakers on Capitol Hill have agreed in principle to a $700 billion bailout for Wall Street. They're taking it to a summit Thursday at the White House, and hope to vote within days.

MICHELE NORRIS, Host:

From NPR News, this is All Things Considered. I'm Michele Norris.

MELISSA BLOCK, Host:

And I'm Melissa Block. If congressional leaders thought they had a deal on a financial bailout plan when they went into a White House summit today, they sure didn't think so coming out. President Bush met at the White House with presidential candidates Barack Obama and John McCain along with congressional leaders, and somewhere along the line things went awry. Here's Senate Majority Leader Harry Reid speaking this evening after the meeting broke up.

HARRY REID: We're going to begin again tonight at eight o'clock to see if we can put this train back on the tracks. John McCain did nothing to help. He only hurt the process. We are convinced that there is a crisis out there that needs to be addressed. The sooner we're able to do that, the better off we are.

BLOCK: And the ranking Republican on the Banking Committee, Senator Richard Shelby, came out of the White House meeting and said this.

RICHARD SHELBY: I can tell you, I don't believe we have an agreement. I have voiced my concerns all along. There are still a lot of different opinions. Mine is it's flawed from the beginning.

BLOCK: NPR's David Welna joins us from the Capitol. David, what happened at this meeting?

DAVID WELNA: Well, Melissa, Democrats at least went into the meeting at the White House saying that they had reached agreement with Senate Republicans and with House Democrats and some House Republicans. They had an agreement in principle about where they should go with this bailout plan. But when they got to this meeting at the White House, there were some House Republicans - including Minority Leader John Boehner and John McCain - there who seemed to have another plan that nobody had seen yet. And it's not really clear what is in that plan. One thing we've heard is that it's for $350 billion rather than $700 billion and that it would involve private insurance as part of it. But in a sense, this was a real surprise for those at the meeting, and they're in some ways back to square one. Things are quite stalled right now.

BLOCK: Back to square one. And you now have Treasury Secretary Henry Paulson, Fed Chair Ben Bernanke going back to the Hill tonight for negotiations. Secretary Paulson's office issued a statement saying he appreciates the hard work by members on both sides of the aisle. Noting difficult credit market conditions, he urged members of both parties to complete legislation quickly. How likely do you think that is to happen?

WELNA: Well, you know, it's been exactly one week since Treasury Secretary Paulson and Fed Chairman Bernanke came up here to the Capitol to say what a dire situation existed with the financial markets and that Congress had to act. It's now one week later, and they right now still seem to be at least days away probably from reaching some kind of an agreement that could be passed by both chambers. And many people are saying, well, wait a minute, there are other ways to skin this cat, and maybe they should be examined.

And what's really not clear is how much time they have to do this before the country risks some kind of a financial collapse. Many people just don't really have much of a notion about how urgent this is. And right now we're not getting that many signs that the stock market went up today, and to many people it seems like life is normal. But at the same time, what they're hearing from financial experts is that things are pretty dire and they have to act quickly. They may stay in over the weekend to try to get this thing done.

BLOCK: Worth noting, David, the stock market went up when there was news that there seemed to be a deal. This meeting, where things seemed to break down, came after the market had closed. So a lot of people are going to be looking very anxiously at what happens in the morning.

WELNA: I'm sure they are. And it seems that these talks that are starting right now here at the Capitol are probably going to go well into the night. And tomorrow was supposed to have been the last day for Congress to be in session before adjourning to go campaign for the November elections. Now it looks like they're going to be here at least until Saturday, and - I mean, this buys more time for those who say we should take maybe a more careful look at this.

But really, many people are looking at Sunday evening as sort of the outside deadline, because Monday morning the markets are going to be opening up again. And there's a real expectation that by then Congress will have done something to solve this problem. What's really unclear, though, is how House Republicans are going to respond to the negotiations that are going on right now. It's not clear they're even going to be attending them. And they're saying, we don't buy into the idea of a bailout. We want a private solution to this.

BLOCK: David, what are you hearing on the Hill about the role that John McCain is playing in all of this?

WELNA: Well, you know, McCain broke away from his campaign yesterday. He said - well, he made one speech this morning, and then he came down to Washington. He said he was suspending his campaign so that he could help break a logjam on this, break a deadlock. And in fact, Democrats say that he made things much more complicated. Here's Barney Frank who is the chairman of the House Financial Services Committee.

BARNEY FRANK: I think this was a campaign ploy for Senator McCain. I think they then had this problem that there might not have been enough of a deadlock for him to resolve. And I don't know what motivated what, but next thing we know, he's in a position frankly where he's making it harder to get things done rather than help us negotiate differences. He's identified with a radically different approach that the secretary of the Treasury has already rejected.

BLOCK: David, sounds like it's going to be a long night there at the Capitol.

WELNA: It is. And as you can tell, presidential politics have worked their way into the financial crisis here.

BLOCK: NPR's David Welna at the Capitol, thanks so much.

WELNA: You're welcome, Melissa.

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White House Talks End Without Bailout Deal

Senate Banking Committee Chairman Christopher Dodd i

Senate Banking Committee Chairman Christopher Dodd (center) speaks during a news conference Thursday following a meeting on Capitol Hill about the market turmoil. AP/Susan Walsh hide caption

itoggle caption AP/Susan Walsh
Senate Banking Committee Chairman Christopher Dodd

Senate Banking Committee Chairman Christopher Dodd (center) speaks during a news conference Thursday following a meeting on Capitol Hill about the market turmoil.

AP/Susan Walsh

Top congressional leaders from both parties joined presidential candidates Barack Obama and John McCain at the White House on Thursday for a meeting with President Bush. The aim was to complete a $700 billion rescue plan for financial markets sought by the White House, but it appears no final deal has been struck.

Lawmakers met with government finance officials later Thursday, but those negotiations also reportedly ended with no deal. Talks were scheduled to resume Friday morning.

Earlier in the day, with McCain seated at one end of the long Cabinet Table and Obama at the other, President Bush told reporters allowed in only for the start of the meeting that if bailout legislation is not passed, the country is in a serious economic crisis.

"All of us around the table take this issue very seriously, and we know we've got to get something done as quickly as possible," the president said. "And this meeting is an attempt to move the process forward. My hope is that we can reach an agreement very shortly."

But when Alabama Sen. Richard Shelby emerged from the meeting Thursday afternoon, the ranking Republican on the Senate Banking Committee told reporters, "We hadn't gotten an agreement."

"There's still a lot of different opinions," Shelby said. "Mine is it's flawed from the beginning."

House Republicans are also lined up against the bailout.

Earlier Thursday, congressional leaders from both parties announced they had reached an agreement in principle on legislation to authorize the bailout. Congress is expected to vote on the bill within days.

Key Changes Made To Plan

The proposed deal would codify many of the basic tenets of the Bush administration's initial plan, released last week, but it includes several key changes.

The money would be made available to the U.S. Treasury in stages. Treasury would have access to $250 billion immediately and an additional $100 billion later, "when the president certifies this emergency continues," New York Sen. Charles Schumer said. If needed, the final $350 billion would be available in May 2009, he said. Congress would be allowed to assess the program after the initial payment and block any additional funds if it deemed them unnecessary.

The agreement could require all companies participating in the program to agree to limits on executive pay — such as restrictions on "golden parachutes." Schumer said the plan would also give the government a financial stake, in the form of warrants, in all participating companies.

Republican Sen. Bob Bennett of Utah said the plan is one that can "pass the House, pass the Senate [and] be signed by the president."

Remaining Sticking Points

Lawmakers said only a few, though potentially problematic, hurdles remain. Among them is a Democratic proposal to alter bankruptcy law in order to give judges the right to change the terms of mortgages. That proposal is hotly contested by the White House, the Treasury and many conservative Democrats and Republicans, who worry such a move would raise interest rates for everyone. The concern is that if judges give breaks on mortgage rates to people in bankruptcy and on the brink of foreclosure, then banks will need to raise rates on everybody else to make up for that loss.

Democrat Barney Frank of Massachusetts, chairman of the House Financial Services Committee, said he didn't expect any remaining details to jeopardize the agreement.

"We came to agreements on a lot of the important issues," Frank said at the press conference following a negotiating session between House and Senate lawmakers. "There really isn't much of a deadlock to break."

Sen. Bob Corker, a Republican from Tennessee, said: "I believe that we will pass this legislation before the markets open on Monday."

Quick Action Urged

It's unclear whether Treasury Secretary Henry Paulson will agree to all of Congress' changes. But the Bush administration may not have much wiggle room, considering it has stated so adamantly that a bailout must happen as quickly as possible.

The Treasury has proposed that the federal government buy $700 billion of illiquid debt from financial firms. The goal is to calm financial markets by removing the toxic assets, mostly mortgage-backed securities, that lie at the heart of the crisis.

Many senior Democrats and rank-and-file Republicans have been wary about the huge cost of the plan and the unfettered power it grants the Treasury secretary to intervene in the marketplace.

In a 12-minute televised address to the nation Wednesday night, President Bush warned that action is needed quickly to forestall financial calamity.

"Without immediate action by Congress, America could slip into a financial panic and a distressing scenario would unfold," he said.

With reporting by Dan Costello, David Welna and Maria Godoy

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