RAY SUAREZ: The struggle to reach a deal on a bailout proposal shook up the political world today, both on the campaign trail, and at the White House, and on Capitol Hill.
First, on the presidential campaign, John McCain spoke to reporters in New York City early this afternoon.
SEN. JOHN MCCAIN (R), Arizona: Tomorrow morning, I’ll suspend my campaign and return to Washington after speaking at the Clinton Global Initiative. I’ve spoken to Sen. Obama and informed him of my decision, and I’ve asked him to join me.
I’m calling on the president to convene a leadership meeting from both houses of Congress, including Sen. Obama and myself. It’s time for both parties to come together to solve this problem.
We must meet as Americans, not as Democrats or Republicans, and we must meet until this crisis is resolved.
I’m directing my campaign to work with the Obama campaign and the Commission on Presidential Debates to delay Friday night’s debate until we have taken action to address this crisis.
I’m confident that, before the markets open on Monday, we can achieve consensus on legislation that will stabilize our financial markets, protect taxpayers and homeowners, and earn the confidence of the American people.
All we must do to achieve this is temporarily set politics aside, and I’m committed to doing so.
Following Sept. 11, our national leaders came together at a time of crisis. We must show that kind of patriotism now.
Americans across our country lament the fact that partisan divisions in Washington have prevented us from addressing our national challenges. Now is our chance to come together to prove that Washington is once again capable of leading this country.
RAY SUAREZ: Barack Obama was in Clearwater, Florida. This afternoon, he told reporters he phoned McCain this morning about the Treasury proposal.
SEN. BARACK OBAMA (D), Illinois: Senator McCain, as I mentioned, returned my call this afternoon. We agreed that this was a critical time for everyone; Democrats and Republicans need to come together to help to stabilize the economy.
I have been in constant contact with leadership in Congress. I’ve talked to Secretary Paulson just about every day. I spoke to him twice today, indicated to him that I intend to do everything that’s required to be helpful.
And we should all do everything that’s necessary to get a bill passed that contains the proposals that I mentioned.
There are times for politics, and then there are times to rise above politics and do what’s right for the country. And this is one of those times.
I don’t think any of us enjoy putting taxpayer dollars at risk, but the risk of doing nothing is economic catastrophe potentially, and that is a risk we cannot afford to take.
No matter how this begun, this is no longer a Democratic or a Republican problem. It is an American problem; it requires an American solution.
With respect to the debates, it’s my belief that this is exactly the time when the American people need to hear from the person who, in approximately 40 days, will be responsible for dealing with this mess.
And I think that it is — it is going to be part of the president’s job to deal with more than one thing at once.
I think there’s no reason why we can’t be constructive in helping to solve this problem and also tell the American people what we believe, and where we stand, and where we want to take the country.
Federal push for the bailout
RAY SUAREZ: Back in Washington, the president was expected to make his case tonight for an urgent deal on his rescue plan for the financial system. The president decided to give the speech as the Treasury secretary and the Federal Reserve chairman were facing a skeptical audience on Capitol Hill.
NewsHour congressional correspondent Kwame Holman has that part of the story.
SEN. CHUCK SCHUMER (D), New York: Let us be clear: Americans are furious.
KWAME HOLMAN: At the Capitol, another rough reception for the Bush administration's $700 billion bailout plan for financial and other firms.
Joint Economic Committee Chairman Chuck Schumer gave the lay of the land to Federal Reserve Chairman Ben Bernanke at his second day of testimony in support of the administration approach.
SEN. CHUCK SCHUMER: I am sure that every single one of my colleagues on both sides of the aisle has heard what I have heard from my constituents: amazement, astonishment and intense anger.
KWAME HOLMAN: But Bernanke, as he did yesterday, said the view of the independent Federal Reserve is that not acting could be calamitous.
BEN BERNANKE, Federal Reserve Chairman: Stabilization of our financial system is an essential precondition for economic recovery. I urge the Congress to act quickly to address the grave threats to financial stability that we currently face.
KWAME HOLMAN: Despite growing questions about the cost and scope of the bailout, the need for action also was supported today by the independent Congressional Budget Office.
Its director, Peter Orszag, predicted "market chaos" without a bailout that could lead to "a financial market meltdown, maybe on the magnitude of the Great Depression."
At the Joint Economic hearing, Bernanke said U.S. economic activity already has "broadly decelerated."
BEN BERNANKE: The intensification of financial stress in recent weeks, which will make lenders still more cautious about extending credit to households and business, could prove a significant further drag on growth. The downside risks to the outlook thus remain a significant concern.
Fears of rewarding risky behavior
KWAME HOLMAN: As he did yesterday, Chairman Schumer asked if the bailout could get started with less than the $700 billion in authority the Treasury Department called for to buy compromised mortgage-backed assets from private firms.
SEN. CHUCK SCHUMER: In your estimation, do you need all of this money now? How much do you need right now? Can you explain why, if you disagree with this idea, why $700 billion is needed immediately?
BEN BERNANKE: I think the concern is that the markets need to have confidence that this problem will be attacked with sufficient force and addressed. Insufficient measures could be perceived as dribs and drabs, and it may not have the sufficient force to address the confidence issue.
KWAME HOLMAN: Maryland Democrat Elijah Cummings asked Bernanke to spell out how getting bad assets off the books of big financial firms would help ordinary mom and pop citizens.
REP. ELIJAH CUMMINGS (D), Maryland: What do you say to them, that the superstar that you are, that what affect will this have on them?
BEN BERNANKE: The credit system is like the plumbing. It permeates throughout the entire system. And our modern economy cannot grow, it cannot create jobs, it cannot provide housing without effectively working credit markets.
KWAME HOLMAN: Texas Republican Kevin Brady echoed the public statements of many members of Congress since the bailout was unveiled.
REP. KEVIN BRADY (R), Texas: When we listen to folks back home -- and I don't think we always give our constituents the credit for smarts, as we should -- and their point is they simply don't want to reward this risky behavior.
Their feeling is that many of them -- and I agree, to a great extent -- why don't we allow the free market system to correct itself?
BEN BERNANKE: My response is that the pain would be very significant. It would be very difficult for Main Street. If this credit system broke down, it would be very costly to average people.
Here's a better solution. The better solution is to recognize that things went wrong, we've got a problem now that we can solve, if we address it with enough force.
Bernanke, Paulson field questions
KWAME HOLMAN: This afternoon, Bernanke was joined by Treasury Secretary Henry Paulson at a hearing of the House Financial Services Committee. There, members' views of the bailout plan ranged from wariness to hostility.
Ohio Republican Deborah Pryce spoke for many on the panel.
REP. DEBORAH PRYCE (R), Ohio: Right now, what we have before us is a "trust me" proposal. Our jobs as representatives is to do the people's will. And so far, you're a far cry from having the people on your side.
We can't say to them, "Trust me, trust the Fed, trust the Treasury," because they already feel that that trust has been breached.
I want to make the case -- I want you to make the case to me today so I can make the case to my constituents. Yours is a sales job, gentlemen.
KWAME HOLMAN: Republican Peter King of New York questioned the power that would be held by Secretary Paulson, who has only four months left in office.
REP. PETER KING (R), New York: No matter how the final language is, though, the reality is there's going to be extraordinary power in the Treasury secretary -- and I think that's warranted. I'm not questioning that.
I'm just saying, if you can give us some assurances as to how you think that, no matter who the Treasury secretary is, will be used properly and what will be done during the transition to make sure that the next administration hits the ground running.
HENRY PAULSON, U.S. Treasury Secretary: There will be -- and Ben Bernanke can talk to this, also, because we are -- as we work through this, we are going to be -- we have a number of very good ideas, I believe, on how to execute this program, but nothing like this has been done before.
So we're going to need help and advice, and we're going to, I'm sure, do some things better than others and make change a bit as we go along. And, clearly, we will be working with the next administration and working carefully on a transition.
This is something that all of us have to own. This is for the United States of America and for the American people.
Concerns over CEO compensation
KWAME HOLMAN: Illinois Democrat Luis Gutierrez raised another issue that's roiling the public, whether executives in rescued companies still might reap big-pay bonuses.
Paulson initially warned limits on executive compensation could scare away companies from participating in the program. Now, he's reconsidering.
REP. LUIS GUTIERREZ (D), Illinois: Please explain to me what we're going to do about these executive compensations, given the fact that we are asking the American taxpayer to sacrifice and put $700 billion out there, when other people have been lining their pockets and are continuing to line their pockets today.
I want to make sure it doesn't happen tomorrow, because, politically, that's very embarrassing to me.
HENRY PAULSON: Well, it should be embarrassing politically and substantively and any other way.
I believe we need to figure out some way to incorporate this in this plan, but it has to be a way to incorporate it so the plan can still be effective. And one of our big objectives here in the plan -- and what I think it takes to make this plan work -- is to, as opposed to some other plan...
KWAME HOLMAN: After two days of testimony, negotiations between the administration and Congress will continue behind the scenes.