Mixed Messages from Congress after Historic Day of Meetings on $700B Bailout Plan

Following closed door meetings on Capitol Hill today, where a tentative agreement was reached on the administration’s $700 billion bailout plan, Congressional leaders joined President Bush and presidential candidates Senators Barack Obama and John McCain at a historic White House meeting. Although Senate Banking Committee Chairman Christopher Dodd, a Connecticut Democrat, told reporters shortly before 1:30 EST that an agreement on a “set of principles” had been reached and officials were prepared to act quickly to “send a message to the markets,” some Republicans were still apparently balking at the plan. Alabama Sen. Richard Shelby, the leading Republican on the Senate Banking Committee, came out of the hour-long West Wing meeting and said, “I don’t believe we have an agreement,” according to the Associated Press. Before the meeting got under way, Bush said, “We’re in a serious economic crisis in the country if we don’t pass a piece of legislation. We know we’ve got to get something done as quickly as possible.” Earlier in the day, Dodd said members of his committee and the House Financial Services Committee had agreed to the plan that would buy distressed assets. Their plan also includes Treasury oversight, limits on executive pay for companies participating in the bailout and relief for homeowners facing foreclosures, according to Bloomberg. Utah Republican Senator Robert Bennett said he expected legislative language to be completed by the end of the day and predicted the plan would pass, Bloomberg reported. As the leaders headed to the White House, Senate aides, speaking on condition of anonymity, told Bloomberg the Treasury would have $250 billion available immediately. An additional $100 billion would also be available if needed. The remaining $350 billion could be blocked by a Congressional vote. House Republicans, meanwhile, released their own proposal, one that is aimed at getting private capital to invest in the credit markets. The proposal calls for the government to provide insurance to companies that buy troubled assets. Participating firms would pay insurance premiums to the Treasury Department, according to an Associated Press report this afternoon. The president made a 12-minute address to the nation Wednesday night in which he sought to explain the dire financial situation to Americans. He stressed that the quick approval of a plan was urgently needed. “Without immediate action by Congress, America could slip into a financial panic, and a distressing scenario would unfold,” Bush said. “Our entire economy is in danger.” The administration’s proposed $700 billion bailout plan would enable the U.S. Treasury to buy bad mortgages from financial institutions. Federal Reserve Chairman Ben Bernanke said Tuesday during testimony before the Senate Banking Committee that the number represented approximately 5 percent of the outstanding mortgages. But for the past several days senators and representatives on both sides of the aisle have been concerned about the high price tag. Sen. Charles Schumer, D-New York, suggested breaking down the rescue plan into smaller chunks, or tranches, of about $150 billion each. While initially dismissed by Treasury Secretary Henry Paulson as a “grave mistake,” the idea has been gathering support and may be part of the final plan. What else will be in the final bailout, or rescue plan as Bush referred to it, is still unknown. House Financial Services Chairman Barney Frank said Wednesday night that Senate and House Democrats had agreed to include caps on CEO and executive pay at companies that receive federal help, boost the oversight, provide relief for homeowners facing foreclosures, allow bankruptcy judges to change mortgages and allow the Treasury to take equity in the companies so that taxpayers footing the bill are treated as investors and can reap any benefits. Paulson has been hesitant to include that fearing that companies may not want to participate. But those are some of the top concerns of Americans flooding their congressional representatives’ offices with phone calls and e-mails complaining about the proposed bailout. The presidential candidates are also sensitive to those key issues. Obama and McCain released a joint statement on Wednesday in which they noted the American people are facing a “moment of economic crisis.” They described the $700 billion bailout plan submitted to Congress as “flawed” but that the “effort to protect the American economy must not fail.” “No matter how this began, we all have a responsibility to work through it and restore confidence in our economy. The jobs, savings, and prosperity of the American people are at stake,” the candidates said. McCain said he was suspending his campaign and returning to Washington to work on the bailout plan and called for Friday night’s debate in Mississippi to be postponed until the financial crisis is resolved. Obama planned to be at the White House meeting but continued with his campaign and said the debate should be held. He said the public needs to hear from its presidential candidates now more than ever, and that a president must deal with multiple problems at the same time. The United States Commission on Presidential Debates said today the debate at The University of Mississippi would go on as scheduled. If there is no signed agreement by Friday night, Obama may have the stage to himself.