Congress reaches agreement on Wall Street bailout plan - Spokane, North Idaho News & Weather KHQ.com

Congress reaches agreement on Wall Street bailout plan

WASHINGTON - Congressional Republicans and Democrats reported agreement in principle Thursday on a bailout of the financial industry, and said they would present it to the Bush administration in hopes of a vote within days.

Emerging from a two-hour negotiating session, Sen. Chris Dodd, D-Conn., said, "We are very confident that we can act expeditiously."

"I now expect that we will indeed have a plan that can pass the House, pass the Senate (and) be signed by the president," said Sen. Bob Bennett, R-Utah.

The bipartisan consensus on the general direction of the legislation was reported just hours before President Bush was to host presidential contenders Barack Obama and John McCain and congressional leaders at the White House for discussions on how to clear obstacles to the unpopular rescue plan.

Key lawmakers said at midday that few difficulties actually remained, and warned that time was running short to bolster the distressed economy.

"There really isn't much of a deadlock to break," said Rep. Barney Frank, D-Mass, chairman of the House Financial Services Committee.

Earlier, Paul Kanjorski, D-Pa., chairman of the House Financial Services Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises, told CNBC that negotiations over a proposed $700 billion rescue for Wall Street have gone well and a plan could be in place before financial markets open on Monday morning.

A bailout plan package "is basically done" and the "hard issues are resolved," he said in an interview Thursday. "This is almost a done deal, but I can't announce it because that's not my role," he added. "Just tell the American people the cavalry has arrived; we're home."

Indications of a breakthrough in negotiations over the Wall Street rescue plan come as President Bush prepares to bring presidential candidates Barack Obama and John McCain into the discussion.

Senior lawmakers and the Bush administration officials have cleared away key obstacles to a deal on the unprecedented rescue, agreeing to include widely supported limits on pay packages for executives whose companies benefit.

They're still wrangling over major elements, including how to phase in the eye-popping cost - a measure demanded by Democrats and some Republicans who want stronger congressional control over the bailout - without spooking markets. A plan to let the government take an ownership stake in troubled companies as part of the rescue, rather than just buying bad debt, also was under intense negotiation.

The core of the plan envisions the government buying up sour assets of shaky financial firms in a bid to keep them from going under and to stave off a potentially severe recession.

Earlier, as political figures haggled over the shape and price of the bailout, new economic indicators showed that orders for big-ticket manufactured goods plunged in August by the largest amount in seven months, and that new applications for unemployment benefits were at their highest level in seven years.

On Wall Street, stocks rose Thursday on optimism about the deal but a credit market squeeze remained as doubts about the proposed plan's effectiveness drove demand for short-term, safe-haven assets.

Bush acknowledged in a prime-time television address Wednesday night that the bailout would be a "tough vote" for lawmakers.

But he said failing to approve it would risk dire consequences for the economy and most Americans.

"Without immediate action by Congress, America could slip into a financial panic, and a distressing scenario would unfold," Bush said as he worked to resurrect the unpopular bailout package. "Our entire economy is in danger."

Bush's warning came soon after he invited Obama and McCain, one of whom will inherit the economic mess in four months, as well as key congressional leaders to a White House meeting Thursday to work on a compromise.

Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke have been crisscrossing Capitol Hill in recent days, shuttling between public hearings on the proposal and private meetings with lawmakers, to sell the proposal.

Obama and McCain are calling for a bipartisan effort to deal with the crisis, little more than five weeks before national elections in which the economy has emerged as the dominant theme.

"The plan that has been submitted to Congress by the Bush administration is flawed, but the effort to protect the American economy must not fail," they said in a joint statement Wednesday night. "This is a time to rise above politics for the good of the country. We cannot risk an economic catastrophe."

Presidential politics intruded, nonetheless, when McCain said earlier Wednesday he intended to return to Washington and was asking Obama to agree to delay their first debate, scheduled for Friday, to deal with the meltdown.

Obama said the debate should go ahead.

Lawmakers in both parties have objected strenuously to the rescue plan over the past two days, Republicans complaining about federal intervention in private business and Democrats pressing to tack on more conditions and help for beleaguered homeowners.

Former President Clinton said Thursday that one thing lawmakers must avoid is any bill that effectively rewards bad judgments and dangerous risk-taking among financiers.

"You have to be careful not to have unjust enrichment," he said on CBS's "The Early Show."

(www.msnbc.com)

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