'Verbal' deal in place for bailout
House and Senate negotiators have reached tentative agreement on Treasury’s $700 billion rescue plan for the financial markets after a marathon Capitol negotiating session that started Saturday afternoon and stretched into early Sunday morning.
House Speaker Nancy Pelosi (D-Calif.) and Senate Majority Leader Harry Reid (D-Nev.) said the deal still had to be “committed to paper,” a process that will continue throughout the night, with an eye toward a formal announcement Sunday.
“We have something verbal,” said Rep. Rahm Emanuel (D-Ill.).
Republican Whip Roy Blunt (R-Mo.), the chief negotiator for the House GOP, said he was “looking forward to what we’re going to see on paper” but said he was optimistic that it would be something House Republicans could support.
“I’m not sure yet we can sell it to our conference but I’m 100% sure that this is the best deal we could get,” said a Republican aide.
Said Treasury Secretary Henry Paulson: “We’ve been working very hard on this and we’ve made great progress toward a deal which will work and will be effective in the marketplace and effective for all Americans . . . .We’ve still got a lot to do to finalize it, but I think we’re there.”
The draft agreement assures Paulson a relatively free hand in accessing the first $350 billion of the $700 billion he sought. The second $350 billion could be blocked by a future Congress through a joint resolution, which could be vetoed by the president. But lawmakers agreed to drop the requirement that these funds could not be available until three months after enactment of the bill.
Lawmakers won substantially greater oversight that Treasury had first proposed allowing in its legislation submitted to Congress last week. And limits would be imposed on the pay and severances packages for executives at companies helped by the plan.
Down the road, the measure also opens the door to allow the government—on behalf of taxpayers—to take an equity share in the companies it helps, either through warrants or options to buy stock.
On two key points, compromises had to be reached on competing priorities for the two parties.
In the first case, Democrats had proposed that the Treasury be required to impose a fee on Wall Street transactions to help cover the cost of any government losses as a result of the rescue plan. But Republicans and Treasury resisted, and the final compromise calls for the next president to submit a legislative proposal to Congress in four years, after some assessment can be made of the costs to the government.
The second compromise dealt with a Republican proposal that the government intervene in the markets, not by buying up bad assets but by providing a federally backed insurance program that might make the same mortgage-related securities more salable. The compromise reached would require Paulson to set up such an insurance alternative if he goes ahead with his plan, but he is not compelled to use the insurance option.
A vote in the House could come as early as Monday, Emanuel said.
House GOP leaders had warned Saturday evening that they would need to take any deal to their rank-and-file members before committing to back it.
Racing to reach a deal before the markets open Monday, lawmakers met late into the night in the Capitol office of Pelosi. Paulson set up a sort of command center in the office of Minority Leader John A. Boehner (R-Ohio), with legislators and staffers criss-crossing Statuary Hall as they shuttled back and forth.
As the talks neared 10 p.m., Paulson could be seen through the windows of Boehner’s second-floor office, sitting on a sofa flanked by aides in chairs around the room. Pelosi passed through a hallway with her son. Asked if a deal would come together before the night was over, she said, “I hope so.”
Just before 11 p.m., Paulson, the two principal GOP negotiators – Blunt and Sen. Judd Gregg (R-N.H.) – Emanuel, Pelosi chief of staff John Lawrence and White House legislative affairs aide Dan Meyer walked into Pelosi’s office.
In a sign that negotiations were growing serious earlier in the evening, a Pelosi aide collected BlackBerrys from the staffers meeting in her office so that no details would leak out.
Just after 8 p.m., pizzas arrived at Paulson’s HQ in Boehner’s office. Democratic staffers ordered in burgers from Five Guys.
"This is Saturday night,” said Senate Budget Committee Chairman Kent Conrad (D-N.D.) “You have the secretary of Treasury. You have congressional leaders. You have committee chairmen of all the committees of jurisdiction. And we are here. There’s a reason we’re here — because there’s a great feeling of responsibility to get a package as quickly as we can while doing it as well as we can."
While the meeting in Pelosi’s office was supposed to include just Paulson and the principal negotiators – Blunt, Rep. Barney Frank (D-Mass.) and Sens. Chris Dodd (D-Conn.) and Judd Gregg (R-N.H.) — a substantial number of Senate Democrats were there as well.
Republicans complained that the presence of the additional Democrats was making the process more difficult; by setting up shop in Boehner’s office, Paulson was able to get some breathing room after spending hours in close quarters, where at times he was hectored by some of the Senate Democrats.
Earlier in the day Saturday, Boehner had gone before the TV cameras to say that House Republicans would not agree to a bill “that bails out Wall Street at the expense of American taxpayers.”
"Somebody, maybe it was Einstein, said things should be done as quickly as possible, but no quicker than possible," said Blunt, who added: "We're not moving on any kind of artificial timeline. We're moving toward the very best solution in the shortest period of time."
But there was also a new sense of urgency to the negotiations Saturday – and increasing pressure on the House GOP.
President Bush pushed for a deal in his weekly radio address. The editorial page of the Wall Street Journal — influential with conservative Republicans — said a bailout was needed “to avoid a deeper downturn.”
Sen. Bob Bennett (R-Utah) warned publicly that another major U.S. bank was “teetering” on the edge of failure, and Republican Senate leaders — plus GOP Sens. Pete Domenici (N.M.), John Sununu (N.H.) and Gregg — laid out doomsday scenarios in a Republican Senate Conference meeting.
Sources said Saturday afternoon that as many as 40 Republican senators were prepared to vote for the emerging bailout deal if bankruptcy and social spending provisions are dropped. And while McConnell was not yet ready to abandon House Republicans — or John McCain — sources said his views might change if there were still no deal by Sunday evening.
For his part, McCain – fresh off his debate with Barack Obama in Mississippi – spent Saturday calling House Republicans to test support for the rescue plan, according to one lawmaker who was contacted. In addition to President Bush and Paulson, the McCain campaign said the Arizona senator had been in touch with McConnell, Gregg, Sen. Jon Kyl, Boehner, Blunt and nine other House Republicans.
As his colleagues worked on the deal at the Capitol Saturday night, McCain and his wife, Cindy, dined with Sen. Joe Lieberman and his wife, Hadassah, at CityZen, one of Washington’s best restaurants.
Barack Obama was at a dinner in Washington for the Congressional Black Caucus. Earlier in the day, his campaign said, he had talked by phone four times with Paulson and had made calls to Pelosi, Senate Majority Leader Harry Reid (D-Nev.), Sen. Chuck Schumer (D-N.Y.) and others involved in the negotiations.
it's too soon to know how the tentative deal will play for either of the presidential candidates.
Republicans had been clearly worried that McCain’s first effort to engage in the bailout negotiations didn’t come off as well as they might have hoped — that in the public’s mind, a deal was close until McCain parachuted in to save the economy and, by turns, his presidential campaign, only to have a White House meeting collapse and the candidate leave town for the debate with the various factions farther from a deal than they’d been before he'd arrived.
House Republicans had worked hard to recast those events.
What actually happened, they said: By not taking a stand on the modified version of the Treasury plan that Democrats, Senate Republicans and the White House seemed nearly ready to support Thursday, McCain gave House Republicans the time they needed to force a better deal for taxpayers and homeowners alike.
During a brief session in the Capitol on Friday, McCain reminded a small band of Republican leaders that he had given them a political opening in the landmark legislative fight.
According to people present, McCain then told his congressional colleagues, “Now, go get something.”
As McCain greeted his top allies on Capitol Hill Thursday, lawmakers were working toward a compromise deal in a bipartisan, bicameral meeting. When that meeting ended, both Dodd, the Democratic chairman of the Senate Banking Committee, and Bennett said that negotiators had agreed on a plan that could pass both houses of Congress and be signed by the president.
Gregg told Politico Friday that the Thursday compromise wouldn’t have come together so quickly if Democrats hadn't known that McCain was on his way. “We wouldn’t have had as much movement] as we did have, if he hadn’t come to town and some of our colleagues on the other side of the aisle wanted to upstage him,” Gregg said.
With the deal struck, Republicans in the House believed that the trap was set, not so much for McCain as for their own leader, Boehner.
As House Republicans saw it, Democrats and the White House were close to a deal and just needed McCain to sign on so they could roll Boehner under the bus and claim a bipartisan victory.
Boehner himself had emerged from a brief meeting with McCain earlier that day in his Capitol office unsure what the presidential candidate would do.
But if the Democrats and the White House were ready for a game of “ganging up on Boehner” – as the minority leader would describe it later – McCain didn’t play along.
At the White House, Bush beseeched lawmakers to join him in announcing progress toward a deal. According to one report, the president asked, "Can't we just all go out and say things are OK?"
But McCain said little during the White House meeting. And when it ended, neither he nor Bush nor Barack Obama said anything at all to the reporters waiting outside in the rain.
In a statement Friday morning, the McCain campaign said that the meeting “was spent fighting over who would get the credit for a deal and who would get the blame for failure.”
Most important: “There was no deal or offer yesterday that had a majority of support in Congress.”
That play gave Boehner, whose rank-and-file was in an open revolt against the Bush administration plan, more room and more time to operate.
It’s not what House Republicans were expecting. McCain has a strained relationship with many of his GOP colleagues, some of whom view him as a political opportunist who chooses personal glory over partisan loyalty.
Republicans acknowledge that McCain’s first trip back to Washington didn’t shift votes in either direction; even they acknowledge that they don’t know what, exactly, their presidential candidate thinks of the Treasury plan.
But they credit McCain with creating an opening they didn’t have before.
“(The trip) played a very important role in elevating this to a serious crisis for most voters,” said Rep. Adam Putnam (R-Fla.), the Republican Conference Chairman.
Gregg agreed, saying that the trip focused voters’ attention on the financial problem in a way that nothing else had: “People suddenly said, ‘Oh wow this must be really, really bad if you’ve got both presidential campaigns . . . coming to Washington,” Gregg said.
On Friday morning, McCain paid Boehner a follow-up visit in the leader’s large Capitol suite. They were joined by Putnam, Blunt and his chief deputy, Virginia Rep. Eric Cantor, who played a central role crafting the Republicans’ alternative.
The presidential candidate told the assembled congressional leaders that he was initially skeptical about Paulson’s grave economic warnings, but that he became convinced after a series of briefings that the need was very real. Congress had to pass something over the weekend, McCain said.
But he told the group that Pelosi had a choice: She could either allow her negotiators to craft a package that Republicans would accept, or she could make it a partisan vote by attaching the plan to a must-pass stop-gap funding bill that lawmakers from both parties would be compelled to support.
If she chose the latter category, McCain told the Republican leaders that they could vote against the hugely unpopular measure and he would help them make that vote a campaign issue on the trail.
Before he left, he told the group that he needed to fly to Mississippi for the first presidential debate, so he wouldn’t be sticking around either way.
But, he told them, “You guys need a negotiator.”
That same morning, Boehner tapped Blunt to fill the role, jump-starting a legislative conversation that had stalled; just the night before, House Republicans had refused to send a representative to a meeting with Paulson, the Democrats and Senate Republicans.
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'Verbal' deal in place for bailout
By DAVID ROGERS & PATRICK O'CONNOR |
9/28/08 2:27 AM EDT
Updated: 9/28/08 2:27 AM EDT
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