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Bailout Talks Disintegrate Into Verbal Brawl;
Fate Uncertain
Friday, September 26, 2008
AP
Sep. 25: President Bush meets with congressional leaders during a meeting in the Cabinet Room of the White House.
The fate of the Bush administration's $700 billion bailout package was
thrown into doubt Thursday evening, after congressional leaders left a
landmark White House summit on the economy hurling accusations at each
other and declaring there was no deal.
Congressional
leaders continued into the evening negotiating the proposed bailout of
the financial industry with Treasury Secretary Henry Paulson's
participation, but the negotiators ended the night without a deal.
The summit at the White House, which included Barack Obama and John McCain,
was intended to be a consensus-building exercise — one of the final
stops on the rocky road to approving the controversial rescue package.
Congressional leaders just hours earlier had announced they had reached
an agreement in principle on the rescue package.
But as Obama and McCain left, officials and aides who had attended the meeting said the summit ended on a very low note.
"This meeting ended bad — real bad," one source told FOX News. Others described the tone as "angry" and "heated," saying Democrats were upset with House Republicans in particular who would not drop their opposition to the administration's proposal.
"We may have gone backward," another source said.
Some Democratic leaders said
as much publicly, laying the blame partly on McCain, whom they accused
of destabilizing the talks by calling for the candidates to enter the
economic negotiations.
"The next thing we know,
he's in a position frankly where he's making it harder to get things
done, rather than help us negotiate differences," Rep. Barney Frank,
D-Mass., said.
Obama said more work needs to be
done to resolve differences, but he didn't see a need for the
candidates' direct involvement in negotiations.
"Here’s
my observation and I think this may have been confirmed at the meeting
today — when you inject presidential politics into delicate
negotiations, sometimes it’s not helpful. The cameras change things,â€
Obama told FOX News. “It's not clear to me that having presidential
candidates in a high-profile way in the negotiating process is useful.â€
Banking Chairman Chris Dodd, D-Conn., said, "It was a photo op for John McCain. ... It was a rescue plan for John McCain."
Bush
called Thursday's emergency meeting with lawmakers the night before,
after Sen. McCain announced he was suspending his campaign activities
to deal with the rescue package.
Though McCain
and Obama exited without making any comments, Republican Sen. Richard
Shelby of Alabama emerged from the meeting to declare there was no
agreement.
"I don't believe we have an
agreement," said the ranking minority member of the Senate Banking
Committee. "There's still a lot of different opinions."
The
top two Republican leaders in Congress, House Minority Leader John
Boehner and Senate Minority Leader Mitch McConnell, issued statements
saying there was not yet an agreement.
White House press secretary Dana Perino said after the high-stakes meeting that "there is a clear
sense of urgency and agreement on the need to stabilize the financial
markets and prevent a massive financial crisis from affecting everybody
in America."
But as to the substance of the
meeting, she said, "members of the administration and the congressional
leaders pledged to continue working together to finalize a bill that
will address concerns and solve the problem as soon as possible."
Both McCain and Obama are expected to stay in the Washington, D.C., area Thursday night.
McCain
has also requested that the presidential debate scheduled for Friday
night be postponed, an option Obama and the debate's organizers have
dismissed. Obama still plans to travel to the debate site in
Mississippi Friday.
McCain's campaign earlier
expressed optimism that negotiations over the financial rescue plan
were progressing, but aides still had concerns about the complaints of
House Republicans.
Bush said Thursday at the
top of the meeting that he hopes to reach a financial bailout agreement
with Congress "very shortly," as he greeted Obama and McCain for the
summit.
“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," Bush said. "And this meeting is an attempt to
move the process forward. My hope is that we can reach an agreement
very shortly.â€
The tentative accord reached
earlier in the day would give the Bush administration just a fraction
of the $700 billion it had requested up front, according to an outline
obtained by FOX News, with half the money subject to a congressional
veto.
Under the plan, the Treasury secretary
would get $250 billion immediately and could have an additional $100
billion if he certified it was needed. The last $350 billion could be
blocked by a vote of Congress under the arrangement, designed to give
lawmakers a stronger hand in controlling the unprecedented rescue.
The
agreement would also set up standards to prevent excessive executive
compensation. It would require most profits to be used to reduce the
national debt, and establish an oversight board and require regular
status reports to Congress. The measures, however, are subject to
change and appeared to be in flux after the close of the White House meeting.
There
were lingering concerns Thursday afternoon, especially among House
Republicans, about whether the package included enough protection for
taxpayers.
Despite the hand-wringing, Dodd and
Republican Sen. Bob Bennett, among others, said earlier that
negotiators from Congress and the administration had arrived at a deal
that could win approval. Other key lawmakers said that after days of
bare-knuckles negotiations there was little of note left to resolve.
Wall
Street showed its pleasure cautiously. The Dow Jones industrials closed
some 196 points higher, though that was down from larger gains earlier
in the day.
The plan's centerpiece is for the
government to buy the toxic, mortgage-based assets of shaky financial
institutions in a bid to keep them from going under and setting off a
cascade of ruinous events, including wiped-out retirement savings,
rising home foreclosures, closed businesses, and lost jobs.
The
Bush administration has made concessions almost daily to demands from
the right and the left from its original three-page proposal, including
agreeing to limit pay for executives of bailed-out financial
institutions and give taxpayers an equity stake in rescued companies.
The White House timed the extraordinary meeting to fit the candidates' schedules — and to convene after the close of stock markets.
It
was somewhat upstaged nearly three hours before various motorcades
deposited the meeting participants and their entourages, when Capitol
Hill leaders reported their deal. Despite the national prominence of
Bush, McCain and Obama, none has been deeply involved in this week's
scramble to hammer out a package.
The Associated Press contributed to this report.