| | |  Americas & Beyond | September 2008 
GOP, Democratic Negotiators Reach Agreement in Principle
 William Branigin, Lori Montgomery & Paul Kane - The Washington Post
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| | Senator Christopher Dodd, center, chairman of the Senate Banking Committee, speaks after negotiators reached a general agreement to move forward with the Bush administration's proposed $700 billion bailout. (Getty Images) | | |
House and Senate negotiators emerged from a closed-door meeting today and said they have reached agreement on basic principles governing a massive financial rescue plan that they hope to pass soon.
Democratic and Republican members of the Senate Banking Committee and the House Financial Services Committee said they came to an accord on many of the issues dividing them as they negotiated the specifics of a $700 billion package proposed by the Treasury Department and the Federal Reserve. The package is aimed at buying up the bad debt that is clogging the financial system and threatening a meltdown, mainly because of risky mortgage-related securities promoted by Wall Street financiers.
Sen. Christopher J. Dodd (D-Connecticut), chairman of the Senate Banking Committee, told reporters after the three-hour meeting, "We've reached fundamental agreement on a set of principles" to guide the financial rescue plan, and he said Congress could pass a bill within days. He said the principles include protection for taxpayers, effective oversight, help for homeowners facing foreclosure and limits on the compensation of executives whose firms take bailout money.
"We're giving [Treasury Secretary Henry M. Paulson Jr.] authority that he will need in order to act and the funding that he will need," Dodd said.
Another participant in the meeting, Rep. Barney Frank (D-Mass.), chairman of the House Financial Services Committee, later said Treasury would not be given $700 billion up front to fund the bailout plan but that the money would be "phased in" over time in installments.
It was not immediately clear whether this response to criticism about handing Treasury a "blank check" would be enough to assuage recalcitrant House Republicans who remain opposed to the central plank of the bailout plan. According to House Minority Leader John A. Boehner (R-Ohio), a large bloc of House Republicans supports most of the side arrangements but rejects the basic idea of allowing the federal government to buy up failing mortgage securities.
Dodd said immediately after the meeting that negotiators would not discuss details of the plan. "Clearly, we now need to meet with the Treasury Department and go over these principles which we've agreed on among ourselves and obviously go back to our respective caucuses to talk with them as well," he said. "But we're very confident that we can act expeditiously." He declined to give a time frame other than "in the next few days."
Frank said negotiators talked "very seriously about the specifics, and we came to some agreement on a lot of the important issues."
He said the negotiators were "able to accommodate the bulk" of Democratic concerns about the plan "in very responsible ways" and that "we are on track, I believe, to pass this."
Frank said lawmakers "are responding, I think, to the central thrust" of the administration's $700 billion bailout request "but adding collectively a number of things that will make people legitimately feel better about the overall vote." Noting that some lawmakers have been invited to a meeting at the White House today "to try to break a deadlock," Frank said, "I'm glad that we'll be able to go and tell them that there's not much of a deadlock to break. But I'm always glad to get to go to the White House."
Frank later said the deal includes a plan to split the $700 billion price tag into three parts: Paulson would receive $250 billion immediately and another $100 billion upon White House certification of its necessity. The final $350 billion could be dispersed without additional Congressional approval, but Congress would be given 30 days to object, he said.
The agreement also includes a strong oversight board for the bailout program, a ban on golden parachutes and other excessive compensation for executives at participating firms and protections for taxpayers, including a provision that would require participating companies to give taxpayers equity in their firms. In addition, the package would provide relief for community banks that own now worthless stock in mortgage finance giants Fannie Mae and Freddie Mac, which were taken over by the government.
The main point of contention between Democrats and Republicans, Frank said, is a proposal to give bankruptcy judges new power to modify mortgages for homeowners, an idea that is widely viewed as a bargaining chip. Democratic presidential candidate Barack Obama (D-Illinois) has said the measure, which is fiercely opposed by the banking industry, should not be in the bill.
Meanwhile, House Democrats were still considering a plan to increase taxes to pay for a portion of the bailout, possibly by taxing stock transfers or levying a "surtax" on millionaires.
Despite those stumbling blocks, Sen. Robert F. Bennett (R-Utah), a senior member of the Senate Banking Committee, said he was encouraged by the meeting. "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 market," he said. He called the meeting was "very productive," adding, "We focused on solving the problem, rather than posturing politically."
Bennett is leading talks for Senate Republicans in place of Sen. Richard C. Shelby (Alabama), the most senior Republican on the Senate Banking Committee. Shelby opposes the plan, but is not standing in the way of a deal.
Less than 30 minutes after Bennett spoke, Rep. Spencer Bachus (R-Alabama), the senior Republican on the House Financial Services Committee, said no deal had been reached during the meeting. While progress was made on peripheral issues, Bachus said House Republicans remain adamantly opposed to the central point of the plan: purchasing bad assets from struggling firms.
"There's not a deal. There's not a deal made. There was progress on the issue," Bachus told reporters. He said House Republicans "would prefer a loan where we fix an interest rate or we would prefer insurance" rather than having the government buy up bad assets.
Bachus said many of those ideas were supported by GOP presidential nominee John McCain (R-Arizona), who returned to Washington today to participate in the negotiations. Bachus said he spoke to Sen. McCain immediately after today's meeting.
"John's not trying to call the shots for the House caucus, I can tell you that," Bachus said. "He's just opposed to the plan in its present form."
Frank reacted angrily to Bachus's statements, insisting that lawmakers were well on their way toward an agreement they could put to a vote and that this afternoon's meeting at the White House was largely irrelevant.
In what the White House described as an effort to wrap up a deal, President Bush is hosting a meeting this afternoon of congressional leaders, including the Democratic and Republican presidential candidates.
Earlier, Speaker Nancy Pelosi (D-California) told reporters she was pleased with the progress so far and hopes legislation would be approved "soon," without defining that timing.
"Please be assured we will have a package that will speak to the issue," Pelosi said. She vowed that "we will act, and we will act deliberately."
Pelosi raised the prospect of setting up a review of the bailout program in the future, leaving the option open of raising taxes if the revenue is not recouped from the mortgage-backed securities purchased by the federal government. Such tax increases would not be part of the currently proposed legislation.
However, Boehner, gathering his GOP colleagues in a private huddle for a third straight morning, declared that there was no bipartisan compromise.
In a subsequent interview, he said his Republican Conference no longer has many objections to the principles that both parties have been seeking, such as limiting executive compensation for firms receiving federal assistance. But he said many members simply cannot support the basic tenet of the bailout proposal.
"You can put all of the ornaments on this that you want, and frankly, all the ornaments everybody agrees with in some form. But it's the core that is of concern," Boehner said.
Boehner's comments signaled concern that a large number of House Republicans - potentially well more than half the party's 199 members - would oppose the legislation, which could come to a vote as early as Friday. Two House Republicans - Reps. Eric Cantor (Virginia), a junior member of leadership, and Paul Ryan (Wisconsin), the ranking member on the Budget Committee - scheduled a press conference this afternoon to outline their continued opposition to the plan.
Because of the highly controversial nature of the bailout, Democrats have been seeking a large, bipartisan final vote in favor of the bailout. But House Republicans - with moderates worried about the $700 billion price tag and conservatives opposed to the abandonment of free-market principles - have remained wary and, in some cases, resolutely opposed.
After three straight morning huddles of his conference, Boehner told reporters today that "there are no decisions yet" on the legislation - even as Frank and a bipartisan group of senators and House members were putting the finishing touches on the legislation before heading to a White House meeting this afternoon.
Boehner still held out hope of some revisions to the legislation that would appeal to a broader swath of House Republicans. "There are a lot of plans that may work," he said. "We've got to find a plan that will work and attract the votes necessary in order to get it passed."
Pelosi said Bush has agreed in principle to four basic conditions for the bailout package: strict oversight, curbs on executive pay, help for homeowners and an equity position for taxpayers in the companies that accept public funds.
"I was pleased that last night the president acknowledged that those four areas ... were items where we had agreement in principle," she said. "And those details are being worked out."
She added: "So I'm very pleased at the progress that has been made and hope that we will be able to bring a bill to the floor soon." She declined to predict whether the legislation could be passed by the time markets open Monday, saying that much will depend on progress in today's meetings at the Capitol.
Pelosi also said Democrats would probably bring a new economic stimulus package to the floor tomorrow separately from the financial rescue bill. She said she hopes to be able to persuade Bush to support it in this afternoon's meeting.
At the White House, Press Secretary Dana Perino told reporters that today's meeting - to include Obama and McCain - is a pragmatic step, rather than a political one.
"We don't think of this as a political event," she said. "We're not trying to make it a political event.... We want them to come here, to be able to offer their ideas. And if their participation can help us save this American economy, then we're going to do it."
Perino also said White House and congressional negotiators were close to "reaching a consensus" on a rescue plan.
"We've made significant progress," she said, adding: "We're going to try to drive that deal to a conclusion today."
The White House for months has flatly rejected proposals from Democrats for a second economic stimulus package, but Perino signaled today that the administration may be softening its position.
While "we don't necessarily think its the right thing to do," Perino said, "we're willing to listen" to stimulus proposals.
Pressed by reporters on whether today's White House meeting with Obama, McCain and other lawmakers would amount to little more than a "group hug" or a "photo op," since the main negotiating action is taking place on Capitol Hill, Perino defended Bush's decision to call the meeting, which was originally suggested by McCain.
"The thought was that bringing these two candidates together would actually help finalize the framework that we were closing in on, and we think that that's all for the better," she said." Members from both sides of the aisle and both houses of Congress and both of the candidates have recognized the urgency with which we need to move and they've been trying to work together. So this if this meeting can help bring it to conclusion, that'll help us too."
Asked if a deal would be ready by the time the 4 p.m. meeting takes place, Perino said: "I can't tell you if we would have the final deal by then or if it would emerge right after that. We'll have to see. But we think that the participation of the two candidates could help us in resolving this situation."
She later clarified that she was not saying a deal is imminent. "I think it's impossible to say," she said. "What I do know is that it is urgent that we get it done."
Perino said participants are "coming to a place where they can get together this afternoon and hopefully close on a framework where we can get this legislation passed."
Dan Eggen contributed to this article. |
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