Wall Street Plan Finds Support

Focus Turns to House GOP

Posted September 24, 2008 at 6:55pm

A joint call from presidential candidates Sens. Barack Obama (D-Ill.) and John McCain (R-Ariz.) for a financial rescue package Wednesday isolated House rank-and-file Republicans who have yet to sign on and are critical to its passage.

Senators on both sides coalesced around a proposal late Wednesday that Members predicted would pass before Wall Street’s opening bell on Monday.

“There’s high anxiety about the opening of the markets on Monday,” Senate Majority Whip Dick Durbin (D-Ill.) said. “It’s good to have a deadline.”

McCain’s qualified support, in particular, was greeted with relief by some Senate Republicans who said they hoped his statements, along with President Bush’s speech Wednesday night, would help persuade reluctant House Republicans to support a bailout. Many saw McCain’s support as essential.

“I was fearful that we wouldn’t get it done,” Sen. Mel Martinez (R-Fla.) said. “But now I think we will.”

The two presidential nominees planned a joint statement that was to lay out their shared principles. McCain also said he would suspend his campaigning to help forge a deal. His proposal to cancel Friday’s presidential debate was rebuffed by Obama.

Durbin said the joint announcement was “a step in the right direction to try to depoliticize this process.” Durbin said he was concerned about House Republican opposition, noting that a GOP Member told him earlier Wednesday that “there’s no support for this except at the [Republican] leadership level in the House.”

Before Obama and McCain acted, Rep. Zach Wamp (R-Tenn.) said the pair would be critical to getting a bill done.

“After eight years, this administration doesn’t have the credibility to convince Main Street that this isn’t just a Wall Street problem,” Wamp said. “But Sen. McCain and Sen. Obama both do, but not separately. If Sen. McCain and Sen. Obama could stand together for two minutes” and get behind a bill, it would help alleviate “worries that it becomes a political football.”

Wamp said Members were coming around to the idea of passing a bill.

“I don’t think we can leave here doing nothing,” Wamp said.

House Democrats warned they wouldn’t go forward without significant Republican support.

“We need Republican votes,” said Rules Chairwoman Louise Slaughter (N.Y.). “We’re not pulling their chestnuts out of the fire. This is their mess; they need to provide most of the votes. We’re willing to help.”

Speaker Nancy Pelosi (D-Calif.)and House Minority Leader John Boehner (R-Ohio) put out a statement saying they had made progress working together on the bill.

Rep. Spencer Bachus (R-Ala.), the ranking member on the Financial Services Committee, called McCain and Obama’s support important.

“It’s very helpful that they’ve taken this out of politics,” Bachus said. “If there was ever a time for us to be statesmen, it’s now. It’s kind of like a war.”

Emerging taxpayer protections and oversight measures in the bill were helping to ease Republican anxiety, including provisions for the government getting equity options from companies, requirements for a transparent auction process to buy assets and restrictions on salaries of executives whose firms benefit.

Bachus said the initial bill could also end up smaller — perhaps $300 billion to $500 billion to start — and said people need to realize that the cost would be less and could even lead to a profit.

“These are real assets being sold at fire-sale prices,” he said.

While leaders agree on the need to pass legislation, House Financial Services Chairman Barney Frank (D-Mass.), Senate Banking, Housing and Urban Affairs Chairman Chris Dodd (D-Conn.) and others had not come up with a final plan as of press time that would provide the Treasury with hundreds of billions of dollars to buy bad mortgages while also providing taxpayer assurances. At press time, Senate Democrats were meeting with Treasury Secretary Henry Paulson.

Frank said he was “encouraged by the testimony” of administration officials, pointing to Paulson’s unsolicited acknowledgment that limits on executive pay will need to be part of the package. He said there is now a bipartisan, bicameral agreement among lawmakers that the federal government needs to get an equity stake in firms that seek relief so taxpayers can benefit from their recoveries.

Despite bipartisan skittishness early this week, Frank expressed confidence that the measure “will have solid majorities in both chambers.”

Frank dismissed as political McCain’s call for a suspension of the presidential campaign until lawmakers finish work on the bailout. “My sense is his polls are troublesome,” he said. “It’s a little late in the game to be saying he’s going to come” and help wrap work on the package.

Nonetheless, he said McCain’s support of a package was helpful, contrasting his earlier critical comments and call for a $400,000 cap on executive salaries, which Frank said was “unreasonable.”

Frank said Bush’s absence from the debate until Wednesday night diminished the gravity of the crisis. “It’s not that his making the speech will help,” Frank said. “It’s that his not making it was hurting.”

Republicans, however, welcomed McCain’s help on the issue.

While McCain was headed to Washington to devote himself full time to addressing the financial crisis, Obama said he did not want to inject presidential politics into a delicate negotiation process with the White House. He said he has urged Senate Majority Leader Harry Reid (D-Nev.) and Pelosi to avoid risking partisan ire adding extraneous measures, such as the Democrats’ proposed economic stimulus bill.

“The real hang-up is the House,” said one Republican Senator, adding that lining up a bipartisan vote in that chamber appeared difficult.

Although Senate Republicans appeared to resist the bailout on Tuesday, they changed their tune a day later.

Minority Leader Mitch McConnell (R-Ky.) outlined a set of principles for the bill that the majority of Republicans support but offered few specifics. Sounding much like his Democratic counterparts, McConnell said on the floor that any Congressional action must include limits on executive compensation for companies that avail themselves of government money, reduction of the national debt, Congressional oversight, transparency for the program and taxpayer protections.

Other Senate Republicans also appeared to be mounting a public relations campaign designed to appeal not just to voters but also to rebellious House Republicans. Several Members spoke on the floor Wednesday afternoon to urge Congressional action to blunt what they said could become a deep economic recession or worse.

For the second consecutive day, Senate Budget ranking member Judd Gregg (R-N.H.) served as one of the point men for McConnell in trying to explain the rationale for authorizing $700 billion to buy bad mortgages as well as reframe the debate as one about saving “Main Street” from the meltdown in the credit markets on Wall Street.

“There are times when our nation faces a crisis of incomprehensible threat — incomprehensible in terms of the size and the effect of it — and at those times, we have united as a nation, and this is a time when we have to do that,” Gregg said on the floor.

Even one the Senate’s most fiscally conservative Senators joined in the leadership-led floor parade, declaring his support for the bailout.

“I believe … that you will see a bipartisan vote in the Senate,” said Sen. Tom Coburn (R-Okla.). “And the sooner the better because every day we’re not fixing this is costing jobs. It’s costing the ability to promote new jobs in our economy, and it’s costing savings for those people who are no longer working but living off retirement.”

Tory Newmyer contributed to this report.