Washington — Congressional leaders announced they had reached a deal in principle Thursday on a proposal to bailout the financial markets, but they provided no details and it was unclear whether House Republicans would sign on.
Top leaders of both banking committees and representatives from both political parties emerged after three hours of negotiation to say they had worked out a final deal on a bill to create a facility to buy up troubled loans. But Rep. Spencer Bachus, the top Republican on the House Financial Services Committee, muddied the waters later in the afternoon by saying: "There was progress on many issues, but no agreement other than to continue discussions."
That was not the impression the Alabama Republican gave to reporters after the negotiations, in which he participated, when he said he had worked closely with Sen. Jack Reed, D-R.I., to add provisions to the bill that would protect taxpayers.
House Minority Leader John Boehner later supported Rep. Bachus, saying "House Republicans have not agreed to any plan at this point."
The turnabout angered House Financial Services Committee Chairman Barney Frank, who was a key leader in negotiations. The Massachusetts Democrat blamed presidential politics for getting in the way.
"To my dismay and disappointment subsequently — after [Rep. Bachus] left the meeting — he raised a couple of new issues that he didn't raise in the meeting," Rep. Frank said in an interview on CNBC. "Apparently he said it was [Sen. John] McCain's idea and this had been my fear — that McCain in the desperation to revive his political campaign would slow down our ability to get anywhere."
The presidential election has overshadowed some of what lawmakers are trying to accomplish. The two presidential candidates are due to meet this afternoon at the White House to help further negotiations. Rep. Frank was adamant that the meeting was a photo op and was getting in the way of finalizing the bill.
Sen. Charles Schumer, D-N.Y. offered the broadest picture of changes that have been made to the bill. In an interview on CNBC, he said that the bill would create two independent boards to oversee the Treasury facility. One would be made up of lawmakers and gather up information on the facility; the other would have the power to "undo what the Treasury secretary has done."
He said Congress was also not prepared to give $700 billion upfront. Instead, Sen. Schumer said lawmakers would give $250 billion immediately, and another $150 billion if the president certifies it is necessary. The facility would have access to an additional $350 billion in May, he said.
Sen. Schumer confirmed that the bill would include a provision to allow the government to take equity stakes in companies it assists.
The New York Democrat's comments tracked with those from Sen. Robert Bennett, R-Utah, who has been the lead Republican negotiating the bill on the Senate side. Sen. Bennett also said the money for the facility would be doled out in chunks.
"There was never anyway you could pay $700 billion all at once," Sen. Bennett said.
During a hearing with Treasury Secretary Henry Paulson and Federal Reserve Board Chairman Ben Bernanke earlier this week in the Banking Committee, Sen. Bennett raised several operational points, questioning whether the plan would work.
He told reporters Thursday that he felt the plan was sufficient to stabilize the markets.
"The percentage of the mortgage market that has gone bad is about 5% and $700 billion is about 5% of it. You are never confident of anything in these circumstances; you do the best you can. I think $700 billion is probably the right number," he said.
Overall, he said Senate Republicans would support the bill.
"I now expect we will indeed have a plan that can pass the House, pass the Senate be signed by the president and bring a sense of certainty to this crisis that is still reeling in the markets that is our primary responsibility and I think we are now prepared to meet it," he said.
Source: American Banker
