Wintry mix Thursday night, another storm Friday

MPR News helps you turn down the noise and build shared understanding. Turn up your support for this public resource and keep trusted journalism accessible to all. 

Turn Up Your Support

President Bush told Congress Friday it must
"rise to the occasion" and pass legislation bailing out the
struggling financial system, and new bargaining was arranged at the
Capitol despite heavy bickering, especially within the Republican
caucus.

      Seeking to soothe frayed and weary lawmakers, Bush delivered a
short statement from outside the Oval Office of the White House,
acknowledging lawmakers have a right to express their doubts and
work through disagreements on the $700 billion plan, but declaring
they must work to avert an economic meltdown.

      But in a sign of continuing division, House Minority Leader John
Boehner demanded that "serious consideration" be given to a
radically different proposal that provides no government money up
front for a financial rescue.


      "If such consideration is not given, a large majority of
Republicans cannot - and will not - support" the administration's
plan, Boehner said in a letter to House Speaker Nancy Pelosi,
D-Calif.

      The legislation the administration is promoting would allow the
government to buy bad mortgages and other rotten assets held by
troubled banks and financial institutions. 


Getting those debts off
their books should bolster those companies' balance sheets, making
them more inclined to lend and easing one of the biggest choke
points in the credit crisis. 

If the plan works, it should help lift
a major weight off the national economy that is already sputtering.
But a significant number of lawmakers, including many House
conservatives, say they're against a publicly-financed bailout.


      What caught some by surprise, either at a fractious White House
meeting Thursday afternoon or shortly before it, was the sudden
momentum behind a dramatically different plan drafted by House
conservatives with Boehner's blessing.


      Instead of the government buying the distressed securities, the
new plan would have banks, financial firms and other investors that
hold such loans pay the Treasury to insure them. Rep. Paul Ryan,
R-Wis., a chief sponsor, said it was clear that Bush's plan "was
not going to pass the House."


      But Democrats said the same was true of the conservatives' plan.
It calls for tax cuts and insurance provisions the majority party
will not accept, they said.


      Bush on Friday morning acknowledged "disagreements over aspects
of the rescue plan." But he also said "there is no disagreement
that something substantial must be done. The legislative process is
sometimes not very pretty. But we are going to get a package
passed."


      White House press secretary Dana Perino later said: "We don't
have any reason to believe that we can't get it done by Monday."

      Rep. Roy Blunt of Missouri, the No. 2 House Republican leader,
was set to attend talks with key lawmakers, as was Treasury
Secretary Henry Paulson, who has labored to keep agreement on the
general outline of a plan from imploding. House Republicans earlier
had boycotted bargaining on the emerging bipartisan plan, calling
it unacceptable.


      GOP Presidential nominee John McCain, who had said he was
suspending his campaign to forge a bipartisan agreement, reversed
course and planned to attend the previously scheduled debate Friday
night with Democratic rival Barack Obama.


      On Wall Street, the level of institutional nervousness was
palpable, with stocks bouncing up and down, especially after
Washington Mutual Inc. became the largest U.S. bank to fail. The
Dow Jones industrial average initially fell while fears of a
deepening economic crisis fed safe-haven buying in Treasury notes.


      White House counselor Ed Gillespie said the administration was
working with lawmakers on how some elements of the rival House GOP
proposal could be incorporated into the package. "There are some
things that may not work and some things that may work," Gillespie
said.


      Democrats said they were confident legislation would ultimately
be completed. "We're going to get this done, and stay in session
as long as it takes to get it done," said Sen. Harry Reid, D-Nev.,
the majority leader.


      Earlier, House Financial Services Chairman Barney Frank declared
that an agreement depended on House Republicans "dropping this
revolt" against the Bush-requested plan.


      Democrats put the responsibility on Bush for getting a rescue
package back on track.


      "We need to get the president to get the Republican House in
order," Sen. Charles Schumer, D-N.Y., said on the Senate floor.
"Without Republican cooperation, we cannot pass this bill."


      Schumer said Bush should also "respectfully tell Sen. McCain to
get out of town. He is not helping, he is harming. Before Sen.
McCain made his announcement, we were making progress." 

Schumer
was referring to McCain's announcement earlier in the week that he
was suspending his campaign to return to Washington for the
negotiations on the financial industry crisis.


      McCain met briefly Friday morning with Boehner, R-Ohio, before
leaving Washington.

      Bush decided to make his brief remarks Friday in hopes of
projecting calm for both the markets and the talks that were to
resume on Capitol Hill with key lawmakers and Paulson, Gillespie
said.


      Bush, whose style is usually to leave the personal lobbying to
others, was on the phone repeatedly Friday with lawmakers,
particularly House Republican leaders and rank-and-file, and
planned to do so all day. 

Vice President Dick Cheney, who is
particularly close with the conservative wing of the party,
canceled a trip to devote the day to keeping in telephone contact
with the Hill from his White House office.


      The White House has seen the entire process as a delicate
balancing act, between understanding the enormity of what Congress
is being asked to do in such a short time and respecting its role
as writers of legislation, while also keeping pressure in a time of
crisis, Gillespie said.


      He said Bush recognizes the urgency of bringing along House
Republicans and understands that Democrats shouldn't be asked to
support any plan without their votes, too.


      Reid made it clear that winning congressional approval of any
rescue package will require Congress to delay a long-sought
adjournment calculated to let lawmakers have five full weeks to
campaign before the election.
      

Gallery

A bad day for the GOP on politics, bailout plan

JPMorgan Chase buys WaMu assets after FDIC seizure

GOP conservatives present rescue alternative

Business and Economic News

President Bush told Congress Friday it must
"rise to the occasion" and pass legislation bailing out the struggling financial system, and new bargaining was arranged at the Capitol despite heavy bickering, especially within the Republican caucus.

Congress restarts troubled bailout talks

Go Deeper.

Like this?

News you can use in your inbox