The Bush administration narrowed its differences with Congress over the Treasury Department’s ambitious $700 billion rescue plan for the financial markets on Monday, but Republicans are restless and Democrats are poised to demand tens of billions more in spending for domestic priorities.
House Financial Services Committee Chairman Barney Frank said Treasury has agreed to greater oversight and pledged to use its added leverage in the mortgage market to help homeowners confronting foreclosure. Faced with bipartisan pressure, Treasury Secretary Henry Paulson is also backing away from his opposition to capping pay for Wall Street and banking executives whose companies will benefit from the massive government intervention.
“I want to get something done here. This is not a time for point-scoring,” said Frank, but the Massachusetts Democrat is walking point for his party in an immensely difficult political — and policy — arena just weeks before the November elections. In the Senate, there is already Democratic backbiting that the House committee chairman has not been tough enough in dealing with Paulson.
At the same time, conservative Republicans are beginning to publicly peel off, despite appeals from President Bush.
“The whole world is watching to see if we can act quickly to shore up our markets,” Bush said Monday. But on a day in which the Dow Jones industrial average fell more than 370 points, the ranking Republican on the Senate Banking Committee, Alabama Sen. Richard Shelby, all but said he would oppose the package. And endangered House conservatives such as Rep. Marilyn Musgrave (R-Colo.) also deserted Bush.
“Ten Conservative Concerns with the Treasury Bailout” was the headline on a sheet handed out by the Republican Study Committee, which met in the House late Monday. The checklist went from explaining fears of altering the free market system to simply stating: “It won’t work.”
“I am concerned that Treasury’s proposal is neither workable nor comprehensive, despite its enormous price tag,” Shelby said. “In my judgment, it would be foolish to waste massive sums of taxpayer funds testing an idea that has been hastily crafted and may actually cause the government to revert to an inadequate strategy of ad hoc bailouts.”
Paulson and Federal Reserve Chairman Ben Bernanke will appear before the Senate Banking panel Tuesday to defend the rescue plan. But Paulson’s immediate priority is to close a deal with Frank and House Democrats, who will be the first to move a bill, possibly as early as this week.
Meeting with reporters, Frank predicted the final cost of the intervention won’t be “remotely” close to $700 billion, since the assets purchased by Treasury will eventually be resold. And he said it is clearer to him now that Treasury can also gain an equity interest in the companies — and not just soak up the bad debts now clogging the credit system.
But as much as Frank is pleased with the foreclosure mitigation provisions now in the draft bill, he faces pressure from the left to go further and rewrite the current bankruptcy laws to allow court-supervised restructuring of mortgages for homeowners. Liberal housing advocacy groups are demanding this change as one price for Democratic support of the bill. Thus far, Frank has asked that it be included in his talks with Paulson.
“We’ll see how hard they fight,” Frank said of Treasury. “It’s something we care about.”
The discussions began over the weekend and ran until 2 a.m. Monday, with Republican and Democratic staffers participating on the House side. But the Senate Banking Committee leadership chose not to participate until quite late. An alternative draft bill, authored by Senate Banking Committee Chairman Chris Dodd (D-Conn.), was dropped into the discussion around 11:30 p.m. Sunday. And while Frank downplayed any differences with Dodd on major policy questions, the incident reflected some of the tensions between the two camps.
Earlier this year, Paulson struck a deal with the House on an economic stimulus bill and then was able to override Democratic objections in the Senate. That will be hard to repeat. But in this context, Dodd’s bill can be seen as a late entry but also a marker of sorts to put pressure on Frank.
On several fronts, the Dodd bill is more aggressive — and certainly longer — than the House draft. Dodd goes so far as to suggest that some portion of any profits on the asset sales be dedicated to an affordable housing fund, and he is more detailed in making recommendations regarding any equity interest Treasury should gain as part of its investments.
“It’s essential that we show we are making progress,” Frank told reporters, but he is looser about the schedule. At one point he suggested a bill could be on the floor in the “next few days.” Later, he said it wouldn’t be fatal if House action should slip into next week. “There’s a lot more agreement today than was on Saturday. A great deal of progress has already been made,” he said.
But Democrats know they are in the spotlight, with the markets falling on Monday, and Speaker Nancy Pelosi (D-Calif.) staged a small news conference late in the evening, on the same spot where she had promised Paulson action on a rescue plan last Thursday night. “We’re getting closer,” Frank said, to which the speaker quickly added that bill would not be “a blank check.”
...............
Paulson, Frank near deal; Senate obstacles remain
By DAVID ROGERS & MARTIN KADY II & PATRICK O'CONNOR | 9/22/08 8:42 PM EDT
| 
| 252 : vote(s) so far
| Cast your vote: