KWAME HOLMAN: Minutes after the opening bell rang on Wall Street, President Bush said a deal is not out of reach.
GEORGE W. BUSH, President of the United States: There are disagreements over aspects of the rescue plan, but there is no disagreement that something substantial must be done. We are going to get a package passed; we will rise to the occasion.
KWAME HOLMAN: Since the administration offered its idea a week ago, members of Congress have demanded better taxpayer protections, rules on executive compensation, and greater oversight of the purchase of up to $700 billion of bad mortgage debt from financial firms in trouble.
Yesterday afternoon, a bipartisan working group said it had the principles of a deal in hand.
SEN. ROBERT BENNETT (R), Utah: I now expect we will, indeed, have a plan that can pass the House, pass the Senate, be signed by the president.
KWAME HOLMAN: But that began to unravel quickly. And by the time President Bush hosted a White House meeting of Hill leaders and the two major presidential candidates, a deal seemed to be slipping away.
The candidates came at the president’s request, after John McCain suddenly announced he would suspend his campaign to help broker a deal and would help persuade Republicans.
But at the meeting, House Republican Leader John Boehner said he wanted negotiators to look at provisions suggested by some of his more conservative members. According to news accounts, that ignited acrimony inside the White House gathering that endured afterwards.
REP. BARNEY FRANK (D), Massachusetts: At this point, I honestly don’t know what the House Republicans are planning to do or how.
KWAME HOLMAN: This morning, Boehner said his members’ suggestions should have come as no surprise, and refused to take the blame.
REP. JOHN BOEHNER (R-OH), House Minority Leader: I’ve been in conversations with the administration and the speaker of the House all week. There was nothing that was put on the table yesterday that Speaker Pelosi didn’t already know about, nor the Treasury secretary or the president.
Those conversations have been going on at that level. And I don’t know what games were being played at the White House yesterday, a gang-up on Boehner, but if they thought they were rolling me, they were kidding themselves.
Public resistance led a new draft
KWAME HOLMAN: One of the things members negotiating the rescue package do agree on is that the initial public reaction to it was strongly negative. Constituents were angry about a perceived $700 billion bailout for financial firms.
House Republicans say that's why they've come up with ways to protect taxpayers better. Under their plan, instead of having the government buy and then sell bad debt, the Treasury Department would provide insurance for mortgage-backed securities. Banks then would pay a premium to the government for that insurance.
REP. JOHN BOEHNER: We need to act quickly and protect the American taxpayer first and foremost. That's what this fight's been about, trying to make sure that we do the right thing for our country while protecting people's taxes.
KWAME HOLMAN: Earlier today, Democrats said that amounted to Republicans halting progress.
SEN. HARRY REID (D-NV), Senate Majority Leader: The time is now for House Republicans to come to the negotiating table and for presidential politics to leave the negotiating table.
KWAME HOLMAN: And Democrats said some issues weren't up for negotiation.
SEN. CHRIS DODD (D), Connecticut: Taxpayers are going to be covered. They're going to have an opportunity to benefit from this plan if they're going to finance it, and we're going to insist that that be part of the plan.
And we're demanding accountability, as well. This is not turning over a check of $700 billion to a secretary of the Treasury for 40 days and an unnamed successor in the next administration for four years without accountability.
KWAME HOLMAN: Is it fair to say that both ends of Pennsylvania Avenue failed to anticipate the fierce negative public reaction to this plan? And can it now be overcome?
SEN. HARRY REID: The answer is, can it be overcome? Yes. I think that there's been some degree of amazement from the White House, and certainly Secretary Paulson and Chairman Bernanke, that people who run for elective office have constituencies that they have to take care of.
KWAME HOLMAN: But the number-two Republican in the House, Roy Blunt of Missouri, who joined the negotiations today, said Democrats have a choice if they don't wish to bargain with Republicans.
REP. ROY BLUNT (R), Minority Whip: Clearly, the Democrats have a majority in both houses of Congress. If 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. I'm eager to be part of that negotiation.
KWAME HOLMAN: Members from both parties say they'll work through the weekend and hope to finish a package by Sunday night.