TOPICS > Economy

Congress, the White House Stall Over Market Rescue Plan

September 25, 2008 at 6:10 PM EDT
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Resistance to the government's $700 billion bailout plan from lawmakers continued Thursday, adding pressure to finish a compromise deal that could bring certainty to the crisis. Kwame Holman reports on the obstacles to passing a final agreement between Congress and the Bush administration.

RAY SUAREZ: The drive to pass a massive bailout deal for the financial system consumed much of Washington’s attention again today. We have an extensive look at the struggle and politics of such a deal, beginning with today’s meeting at the White House.

The meeting included Sens. McCain and Obama. Here’s what the president said as it got underway.

GEORGE W. BUSH, President of the United States: I want to thank the leaders of the House and the Senate for coming. I appreciate our presidential candidates for being here, as well.

We’re in a serious economic crisis in the country if we don’t pass a piece of legislation. I want to thank the spirit of bipartisan cooperation that’s taking place here in Washington.

One thing the American people have to know is that 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. And this meeting is an attempt to move the process forward. My hope is that we can reach an agreement very shortly.

I want to thank the secretary of the Treasury for working hard with the members. I thank the members for working long hours like they’ve been doing to come up with a solution that’s bipartisan and that will solve the problem.

Thank you very much.

RAY SUAREZ: No final deal was announced after that White House meeting, but well before it began lawmakers on Capitol Hill were busy trying to craft a compromise deal.

NewsHour congressional correspondent Kwame Holman has that part of the story.

Drafting a final deal

KWAME HOLMAN: Members of Congress negotiating the financial market rescue were back at it this morning meeting in the Capitol. The three-hour, closed-door session was believed to focus on fixing details to a broad plan laid out over the last several days.

The centerpiece is to have the federal government buy up to $700 billion of compromised mortgage-backed assets from ailing financial firms. But the plan ran into fierce resistance from the public and lawmakers and has been undergoing reworking, including adding strong oversight of the Treasury Department's process of buying the debt.

When the members of Congress emerged from the meeting, they pronounced they had the framework of a final deal, but no specifics.

Senate Banking Chairman Christopher Dodd of Connecticut.

SEN. CHRIS DODD (D), Connecticut: We've reached a fundamental agreement on a set of principles, one, for taxpayers, which is tremendously important. We're giving the secretary authority that he will need in order to act and the funding that he will need.

We also have dealt, I think, effectively with the issue of effective oversight, with home ownership preservation, as well as executive compensation.

KWAME HOLMAN: Republican Robert Bennett of Utah also sits on the Banking Committee.

SEN. ROBERT BENNETT (R), Utah: The most encouraging thing that comes out of it, from my point of view, is that I now expect we will, indeed, have a plan that can pass the House, pass the Senate, be signed by the president, and bring a sense of certainty to this crisis that is still roiling in the markets. That is our primary responsibility, and I think we're now prepared to meet it.

Protecting the taxpayer

KWAME HOLMAN: House Financial Services Chairman Barney Frank.

REP. BARNEY FRANK (D), Massachusetts: We did talk in there very seriously about the specifics, and we came to some agreement on a lot of the important issues.

And, yes, we are on track, I believe, to pass this. The market should be calmed down.

We should note that some of us have been invited to go to the White House today to try to break a deadlock, and I'm glad that we'll be able to go and tell them that there really is not much of a deadlock to break. But I'm always glad to get to go to the White House.

KWAME HOLMAN: Alabaman Spencer Bachus is the top Republican on Frank's committee.

REP. SPENCER BACHUS (R), Alabama: One thing that I'm encouraged by is something that Sen. Reid and I have worked on for taxpayer protection, to see that the taxpayer and that the Treasury is reimbursed for their expenditures.

And I think that was an important step that we all took, and we're committed to the tax money -- the taxpayer being protected.

There was progress today. And I felt like the discussions were very open and we're all committed to a successful and positive conclusion.

Disagreement on the federal plan

KWAME HOLMAN: But within hours, Bachus emphasized there was no final deal, as did several other House Republicans.

And their leader, John Boehner of Ohio, released a statement saying, "House Republicans have not agreed to any plan at this point."

Boehner was echoed by Sen. Richard Shelby of Alabama, the top Republican on the Banking Committee, who spoke after the big meeting at the White House.

SEN. RICHARD SHELBY (R), Alabama: I can tell you, I don't believe we have an agreement. I have voiced my concerns all along.

I don't know if you have this, but I have a five-page -- five pages of the leading economists in America that wrote to me and the leadership saying the Paulson plan is a bad plan, it will not solve problems, it will create more problems, we're rushing to judgment, that we do have stress in our financial markets, but this is not the best way we ought to look at alternatives.

KWAME HOLMAN: Members then traveled back up Pennsylvania Avenue for more discussions at the Capitol.