The Battle Over the $700B Bailout Rolls Into The Weekend
Friday, September 26, 2008SUSIE GHARIB: Congressional leaders and White House officials are still trying to hammer out a deal on that $700 billion financial rescue plan. House Speaker Nancy Pelosi said late this afternoon that Congress will work through the weekend and she is optimistic that a deal will be reached by Monday. That optimism was echoed on Wall Street where stocks rallied with the Dow jumping 120 points. Washington bureau chief Darren Gersh has been following all of today's developments and joins us now with the latest, Darren?
DARREN GERSH, NIGHTLY BUSINESS REPORT WASHINGTON BUREAU CHIEF: Hey, Susie, you know, the good news is that everybody is now saying they want to get something done quickly. The real issue is how you define something and quickly. The day began with the president trying to get all of his players back on the field.
GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: The legislative process is sometimes not very pretty, but we are going to get a package passed. We will rise to the occasion. Republicans and Democrats will come together and pass a substantial rescue plan.
GERSH: Not long after, Senate Democratic leader Harry Reid stepped to the podium to promise action.
SEN. HARRY REID (D-NV), MAJORITY LEADER: We're going to get this done, and stay in session as long as it takes to get it done. We'll work with the president to modify his plan to make it better for taxpayers and homeowners. We want to make sure that there's oversight.
GERSH: A market on intensive care and a major bank failure tend to concentrate the political mind. New Hampshire's Judd Gregg says the renewed pace of talks was no surprise.
SEN. JUDD GREGG (R), NEW HAMPSHIRE: People are -- of any sophistication are looking at the markets and saying, they're telling us we had better do something, and they're telling it to us in pretty stark terms.
GERSH: House Republicans had been in open revolt against the White House, insisting Congress consider cheaper and more free market approaches to the Paulson plan. Today, they agreed to join the negotiations, though Minority Leader John Boehner continued to talk tough.
REP. JOHN BOEHNER (R-OH), MINORITY LEADER: We will not agree to a bill that sells out taxpayers to bail out Wall Street.
GERSH: By late this afternoon, House Speaker Nancy Pelosi signaled some form of the House Republican plan involving government insurance for bad debts could become part of the ultimate package.
REP. NANCY PELOSI (D-CA), SPEAKER: As long as other proposals do not interfere with that, the success of your proposal, I think that you should have the latitude to accept any and all proposals.
GERSH: House Banking Committee Chairman Barney Frank, a key player in the talks, says in order to restore confidence in the markets, the final product will need strong bipartisan support.
REP. BARNEY FRANK (D-MA), CHAIRMAN, FINANCIAL SERVICES COMMITTEE: If this were presented in a partisan way, if one of the political parties in either of the houses looked like they were saying no, or one of the presidential candidates appeared to be trying to undercut it, it will not only be hard to pass, it makes it hard to work.
GERSH: You know, Susie, we just heard a lot from Washington, but I want to tell you something that I heard from Ohio today. When I was there for the primaries, I met a machinist named Ron Gewax (ph). Well, I talked to Ron this morning and he told me that his boss came to him in tears and said, look, Ron, you know, our customers' loans have dried up, we can't -- we're not getting business and we have to let you go. So this credit crunch is now hitting home. That's evidence of how it's hitting home on Main Street.
GHARIB: Absolutely, it's a very tough situation for a lot of people. Darren, we're hearing from other folks about how the financial crisis is affecting them, and we got an earful from people on Chicago's Magnificent Mile.
UNIDENTIFIED MALE: I'm not a big proponent of government bailing out anything, but I think in this situation -- I think a bailout is absolutely necessary to get the -- kind of like the financial wheels turning again in the markets.
UNIDENTIFIED MALE: Tough proposition either way because, on the one hand, you know, taxpayers are going to be footing the bill. But, I mean, at the same time, everyone is impacted by it, because, you know, people have bank accounts, savings, mortgages.
UNIDENTIFIED FEMALE: I'm against it, unless they get something in return for it.
UNIDENTIFIED MALE: I think Paulson is frightening me a little bit right now. He's really gaining too much power.
UNIDENTIFIED FEMALE: Are you worried about your savings? Yes, everybody is. You can't afford not to be. Your savings can go in a split second. All of those years of your working and savings can just go in a split second, in a matter of moments.
UNIDENTIFIED FEMALE: I do have a lot of fears. I'm -- you know, and for my job. I mean, we don't know where all of this is going to end. And, I'm in the airline business and that's not very good to be in right now. So, yes, I'm very concerned.
GHARIB: They're not the only ones concerned, Darren, as you know, members of Congress are hearing similar comments from voters in their districts.
GERSH: Yes -- and, Yes, Susie, you know, we're also hearing a lot about how the politics will impact, you know, the policy, and there's really raising a question of whether it's a question of principle or politics. And Stephanie Dhue has more on that.
STEPHANIE DHUE, NIGHTLY BUSINESS REPORT CORRESPONDENT: High stakes negotiations often follow a predictable path, where things seem to fall apart before they are put back together. You could call it politics. Lawmakers call it principle and take seriously what their constituents have to say. Senate Majority Leader Harry Reid office's was visited by vocal opponents of the bailout. Reid says he has also gotten calls and e-mails against the proposal.
REID: Is this pleasant work? No, it's not pleasant work. Look at what's happening, the calls coming into our offices, our e-mails, people are very unhappy with what we're doing. But we believe we have an obligation to the country and that is Wall Street and Main Street.
DHUE: House Republicans say having the government insure, rather than buy mortgage-backed securities, and including a temporary capital gains tax cut in the plan, reflect their free market principles. Minority Whip Roy Blunt wants those ideas included.
REP. ROY BLUNT (R-MO), MINORITY WHIP: This is a tough time. We are going to negotiate seriously. I've already reached out to the negotiators -- the other negotiators to talk about our desire to get this done and to get this done with some additional free enterprise principles.
DHUE: Democrats have already put their principles into the plan, including Treasury oversight, limits on executive compensation, warrants for taxpayers, and help for homeowners.
REID: We have certain principles we believe in. Are those principles negotiable? Of course they are, we are legislators, legislation is the art of compromise, but our basic principles are not going to be thrown out the window.
DHUE: Normally, presidential election year politics keep high stakes legislation from passing. But political analyst Tom Mann says that a genuine fear that doing nothing could lead the country into a depression is driving lawmakers to pass a solution.
THOMAS MANN, DIRECTOR OF GOVERNMENT STUDIES, BROOKINGS: If it were just politics, they'd do nothing. It would be the safest thing to do. It's hard to sell Americans and especially working class Americans who have been hit hard by recent economic times the necessity of ponying up $700 billion, seemingly to bail out some failed Wall Street executives.
DHUE: The question now is whether a compromise can be crafted before economic conditions make it impossible to fix the problem. Stephanie Dhue, NIGHTLY BUSINESS REPORT, Washington.
GHARIB: So, Darren, it seems like there's a lot of optimism that this deal will get done this weekend. What do you think? Is that going to happen?
GERSH: Well, you know, when you have all the major members coming out and saying, look, we're going to get this done, we're going to get it done soon, that seems to be an indication that it will get done. Whether it will get done this weekend, I don't know. People are saying they hope to get it done by Monday. That's ambitious, but it looks like cautiously that it will get done. Congress doesn't like to go home in the face of a crisis and do nothing.
GHARIB: Right, right. And then the real bottom line is, once this deal is done, whenever that is, will it trickle down to Main Street? Will people really be able to get bank loans and mortgages? Will people be able to keep their jobs?
GERSH: That is the critical question. And what-- I think what the first indication that we'll have to see is whether banks start lending to each other. I mean, if this bad debt indeed looks like it's going to get cleared off the books, banks might start trusting each other. They might lend to each other. And let me tell you, if they're not going to lend to each other, they ain't going to lend to you and me. So that's the first step.
GHARIB: That's right. Darren, let's talk a little bit about the debates tonight. The two presidential candidates have decided to go ahead with their debate, finally, tonight. What do you think they're going to say about the bailout? What are they going to say about this whole credit mess?
GERSH: I think it's all going to be about that. It looks like the format, which was supposed to be foreign security and security matters, is going to get tossed out. Look, I'm already getting the e-mails from the campaigns, the sort of pre-sniping. You know, I think it's going to be fairly predictable, unfortunately, in many ways. I mean, I think we're going to see Obama saying that, you know, Republican stewardship of the economy has failed. We'll see McCain talking about how, you know, he has been for reforms all along, and then they're going to argue back and forth. I would hope that they would address, you know, the United States' standing in the world and whether or not our economy still inspires confidence around the world. We'll see.
GHARIB: The whole world is going to be watching tonight. Here's their chance. Darren, thanks a lot.
GERSH: Absolutely.
GHARIB: Have a great weekend.
GERSH: Thanks.
GHARIB: We have been speaking with Washington bureau chief Darren Gersh.
