Bailout Plan Talks Continue

The Bush administration and Congress anxiously revived negotiations Friday on a $700 billionfinancial bailout, one day after the largest bank collapse in U.S. history provided a brutalreminder of the risks of failure.
     
"I'm convinced that by Sunday we will have an agreement that people can understand on thisbill," predicted Massachusetts Rep. Barney Frank, a key Democrat in eight days of up-and-down talksdesigned to stave off an economic crisis.
     
House Speaker Nancy Pelosi added that "progress is being made," although neither she norFrank divulged details at a late-afternoon news conference in the Capitol. Talks continued into theevening.
     
Frank and Pelosi spoke a few hours after President Bush prodded lawmakers to "rise to theoccasion" - and quickly.
     
In one small sign of progress, House Republicans dispatched their second-ranking leader, Rep.Roy Blunt of Missouri, to join the talks after their objections to an emerging compromise hadbrought negotiations to a standstill the day before. They also demanded "serious consideration" fora plan of their own, involving less government intrusion and lower cost to the taxpayers than the$700 billion that Treasury Secretary Henry Paulson has been seeking.
     
The legislation the administration is promoting would allow the government to buy badmortgages and other sour assets held by investors, most of them financial companies. That shouldmake those companies more inclined to lend and lift a major weight off the national economy that isalready sputtering. But a significant number of lawmakers, including many House conservatives, saythey're against such heavy federal intervention.
    
Under their plan, the government would insure the distressed securities rather than buy them.Tax breaks would provide additional incentives to invest.
     
Democrats and Bush officials said the insurance proposal was acceptable as an option but notas a replacement for the administration's more sweeping approach.
     
The crisis was hardly limited to the U.S.
     
Bush held a lengthy Oval Office meeting with British Prime Minister Gordon Brown that wasfocused on how the problems were spreading, then said, "I told him the plan is big enough to make adifference, and I believe it will be passed."
     
Presidential politics weighed heavily and unpredictably on the election-season effort tostave off a full-blown economic crisis.
After announcing earlier in the week he would suspend his campaign and return to the capitaluntil there was an agreement, Republican John McCain abruptly reversed course and departed forFriday night's debate with Democratic rival Barack Obama.
    
"Now that Sen. McCain is safely in Mississippi we can get back to serious work," snipedFrank, who had challenged the Republican presidential candidate in a White House meeting onThursday to describe his own solution to the crisis.
     
There were fresh signs of urgency at both the White House and the Capitol, one day after theunusually tempestuous White House session and the collapse of Washington Mutual, the largestfailure in U.S. banking history. The Seattle-based institution had invested heavily in thenow-moribund mortgage market.
     
Still, the Dow Jones industrials rose 121 points for the day as investors anticipated aweekend agreement.
     
In days of negotiations, the administration has accepted demands from lawmakers to giveCongress considerable authority to oversee the bailout. Additionally, Paulson relented to requeststo limit the severance packages that corporate executives can receive from firms benefiting fromthe government bailout.
     
Also, rather than provide $700 billion upfront, as Paulson initially requested, Congresswould approve the funds in stages. Under one approach, $250 billion would be made available atonce, with the president able to certify the need for an additional $100 billion on his ownauthority. The final $350 billion would become available with a second presidential certification,although this time Congress would have authority to block it.
     
Any compromise is also expected to require the government to obtain partial ownership of anycompany it invests in.
     
Democrats, too, signaled they were considering jettisoning some of their own priorities.
     
Frank indicated they might ultimately drop a requirement that a portion of any profits fromthe rescue be funneled to a fund to build housing for low-income people. That mandate, deeplyunpopular with Republicans, "is not an essential," Frank said.
     
Additionally, Obama said earlier in the week he hoped Democrats would not press a proposalgiving bankruptcy judges the power to ease mortgage terms for homeowners.
     
Beyond the specifics of any legislation lie political calculations in the shadow ofhard-fought presidential and congressional campaigns.
     
While Democrats control a majority of both the House and Senate, their leaders have made itclear they will not force their rank-and-file to vote without Republican support on a bailoutadvanced by an unpopular president on an unwilling public.
     
In an Associated Press-Knowledge Networks poll, only 30 percent of those surveyed expressedsupport for Bush's package. An additional 45 percent were opposed, with 25 percent undecided. Thesurvey was conducted Sept. 25 and had a margin of error or 3.8 percent. It was conducted over theInternet by Knowledge Networks, which initially contacted people using traditional telephonepolling methods and followed with online interviews.
     
Aides to lawmakers in both parties say telephone calls from constituents are running heavilyagainst the bailout - in some cases nearly 100-1 against, making the vote a potentially tricky onefor a candidate in a competitive race.
     
Ironically, though, many House conservatives who are most opposed to the measure are in safeseats, thus free to resist the daily calls for action - and the warnings from Bush and FederalReserve Chairman Ben Bernanke that a recession looms without a bailout.
     
"Our goal here in attempting to come to an agreement is to do our best to protect Americantaxpayers," said Republican leader John Boehner of Ohio, after a closed-door meeting other GOPlawmakers.
     
Inside the meeting, Boehner received a standing ovation from fellow Republicans, some of whomexpressed anger that Bush and his administration had effectively shut them out of negotiations andtried to force them to support an unpopular bill.
     
"He got a standing ovation because he stood up to the president and Paulson," said Rep. RayLaHood, R-Ill. "Now we're a part of the game."
     
Said Boehner, speaking of the White House meeting: "If they thought they were rolling me,they were kidding themselves."