State Of Bailout Negotiations Examined

President Bush says Congress will "rise to the occasion" and pass a financial bailout plan. Ed Gillespie, counselor to the president, offers his insight on the state of the negotiations over the $700 billion financial bailout plan.

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MELISSA BLOCK, Host:

From NPR News, this is All Things Considered. I'm Melissa Block. In Washington today, lawmakers tried to regroup on a bailout plan for the troubled financial industry. A potential agreement fell apart yesterday in a dramatic meeting at the White House. John McCain and Barack Obama were both there along with President Bush and congressional leaders from both parties, and it was House Republicans who said, no deal. This morning, the president spoke at the White House. He sounded frustrated but determined. We will rise to the occasion, Republicans and Democrats. We'll come together and pass a substantial rescue plan.

Shortly after the president spoke, Barack Obama left Washington for Oxford, Mississippi where tonight he will debate John McCain for the first time. Obama talked briefly with reporters before takeoff. He was asked if yesterday's meeting was a mistake.

BLOCK: I'm not sure that it was as productive as it could have been. But I think at this point, it's important to just move forward.

BLOCK: John McCain had asked that tonight's debate be postponed. But today he said there has been significant progress toward an agreement on the bailout and that he will take part in the debate. In a moment, we'll talk with NPR correspondents traveling with both candidates. But first, joining us from the White House to talk about where the bailout stands is Ed Gillespie, counselor to President Bush. Mr. Gillespie, welcome to the program.

BLOCK: Thanks for having me on.

BLOCK: I understand that the president and vice president have both been on the phone with Republican lawmakers all day trying to get them on board. What can you tell us about how those conversations have gone?

BLOCK: Well, they have been hearing lawmakers out, wanting to understand what their concerns are. Look, this is a very big bill. We're trying to move it in a very quick fashion which is not the norm for the legislative process and people have legitimate concerns and we're listening to those concerns. On the Republican side, there is a desire to explore some market-oriented aspects, in addition to the notion of the government purchasing some of these assets that are, that we're looking to take out of the marketplace so that we can free up liquidity.

That's an understandable approach and something that obviously, as a Republican himself, President Bush is very open to. We want to make sure it works and anything we do has to have an impact in the marketplace because we are at a point where we run the risk of the troubles in the financial markets pouring into people's everyday lives when it comes to things like college loans or auto loans or their 401(k) funds or jobs.

BLOCK: Mr. Gillespie, elsewhere on the program today, the New York Times columnist David Brooks said that he spoke with the conservative House Republican today, and he said your administration has no juice anymore among Republicans on Capitol Hill.

BLOCK: You know, I'm sure that there are members who are looking beyond the election or looking to the election, that's understandable given where we are in the time of the year. But the fact is this is something that's going to require the executive branch and the legislative branch to come together, and the president has put forward a proposal. We always knew that the legislative branch would change that proposal. That's the nature of the process, but the fact is, at the end of the day, I think that what we end up with will be- well I know, it's something that has to be agreed to and signed by the president of the United States and supported by his administration.

BLOCK: Did you expect to see it all fall apart before your eyes at the meeting at the White House yesterday?

BLOCK: Well, that's not what I saw. I know there's a lot of breathless reporting about the meeting yesterday at the White House. But the fact is, as was made clear before the meeting at the White House, there wasn't an agreement with the House Republican leadership or the Senate Republican leadership. There was agreement amongst House and Senate Democrats and that's fine. It's good that they came with- you know, they were able to agree to a proposal.

There were some Republicans who were there, but at least one of the Republicans there, the House Republican who was there said, I'm just here in the spirit of cooperation and support for the process, but I'm not lending commitment to the bill. So there wasn't really an agreement and we certainly hadn't- the administration had not signed off on what the Senate and House Democrats agreed to yesterday, although I thought that was a good step. So, this is the kind of thing that's going to require House Democrats and Senate Democrats and House Republicans and Senate Republicans had come together.

BLOCK: OK. Ed Gillespie, thanks so much.

BLOCK: You bet. Thanks for having me.

BLOCK: Ed Gillespie, counselor to President Bush.

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Lawmakers Lurch Toward Accord On Bailout Plan

A Day In Brief

  • On Thursday night, the government seized Washington Mutual, the nation's largest savings and loan, and sold much of the company to JPMorgan Chase for $1.9 billion. WaMu's downfall represents the largest bank failure in the history of the United States.
  • President Bush said on Friday that a bailout package to offer financial assistance to troubled financial services firms will be passed.
  • Talks continue on Friday between the administration and Congress to reach an agreement on the details of the bailout plan.
  • Sen. John McCain said he will attend the presidential debate in Mississippi on Friday night.
  • Stocks on Wall Street moved lower on Friday before closing in positive territory. The Dow Jones industrial average closed up 121 points at 11,143. But for the week, the Dow was down more than 2 percent and the S&P 500 was down more than 4 percent.
Congress debates the $700 bllion bailout. i i

Congress continues to debate the details surrounding any bailout legislation. On Thursday, Sen. Jack Reed (from left), Rep. Barney Frank, Sen. Christopher Dodd, Sen. Charles Schumer and Sen. Robert Bennett attended a bipartisan meeting on Capitol Hill to disuss their options. Alex Wong/Getty Images hide caption

itoggle caption Alex Wong/Getty Images
Congress debates the $700 bllion bailout.

Congress continues to debate the details surrounding any bailout legislation. On Thursday, Sen. Jack Reed (from left), Rep. Barney Frank, Sen. Christopher Dodd, Sen. Charles Schumer and Sen. Robert Bennett attended a bipartisan meeting on Capitol Hill to disuss their options.

Alex Wong/Getty Images

Democratic congressional leaders reported progress Friday afternoon in talks designed to hammer out legislation that would authorize a $700 billion federal bailout of Wall Street.

The negotiations were jump-started once House Republicans joined the talks — after first threatening to derail the Bush administration's financial rescue plan.

"Now we're back on track," House Speaker Nancy Pelosi said in a late-afternoon press conference following a negotiating session attended by House and Senate Republicans and Democrats.

Pelosi and Democrat Barney Frank of Massachusetts, chairman of the House Financial Services Committee, told reporters that significant progress has been made.

"I'm convinced that by Sunday we will have an agreement that people can understand on this bill," Frank said.

Pelosi added that "progress is being made" but did not divulge details of the talks, which continued into the evening. She said legislators would work through the weekend on the legislation.

Restarting The Talks

The Bush plan calls for the Treasury Department to buy illiquid debt from financial firms. The goal is to calm financial markets by removing the toxic assets, mostly mortgage-backed securities, that are at the heart of the crisis.

House Republicans have balked at the proposal. They say they want a workout for Wall Street, not a bailout. Alternative proposals from House Republicans include both tax breaks and a privately funded mortgage insurance program.

Still, House Republicans designated Minority Whip Roy Blunt to negotiate on Friday with the banking committee chairs and administration officials who have been trying to find consensus on the terms of a bailout. Blunt denied that House Republicans have held up a deal.

"Clearly, the Democrats have a majority in both houses of the Congress," Blunt said. "They want to do this by themselves; they can do this by themselves any minute they want to. If they want to do this with us, we're prepared to have that negotiation."

House Speaker Pelosi insists Republican support is needed to get a bailout bill through Congress.

The bailout talks stalled Thursday evening at a dramatic White House meeting that included presidential candidates John McCain and Barack Obama, as well as House and Senate Republican and Democratic leaders.

Before the meeting, congressional leaders had said they were close to a deal. Afterward, House Republicans said no deal.

President Bush expressed optimism Friday morning that negotiations would get back on track. Minutes after the opening bell on Wall Street, he said, "We are going to get a package passed. There is no disagreement that something substantial should be done. We will rise to the occasion."

Presidential Politics

After announcing earlier this week that he would not participate in Friday night's first presidential debate because he wanted to focus on the bailout talks, McCain changed course Friday, saying he would join Obama in Oxford, Miss.

Obama had said he would attend no matter what McCain decided to do.

The debate at the University of Mississippi is supposed to focus on foreign policy issues. But given the events of the past two weeks in the financial markets, moderator Jim Lehrer of PBS says he will not be constrained by the boundaries negotiated by the campaigns months ago.

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