Congress wrestles with Wall Street bailout package

The on-again, off-again agreement on a national financial rescue plan reveals the thorny political problem now facing Congress: How do you bail out deeply unpopular Wall Street firms without incurring the wrath of voters six weeks before an election?

It's likely to be an equally difficult vote for many members of Congress, who have been deluged with protests from voters over the prospect of a taxpayer-funded rescue package.

“I don’t believe we have an agreement,” said Sen. Richard Shelby (R) of Alabama, the top Republican on the Senate Banking panel, after Thursday’s White House meeting.

But just hours before that meeting to break a deadlock over a historic bailout of US financial markets, congressional negotiators announced that there was no deadlock.

“We’ve reached a fundamental agreement on a set of principles,” said Sen. Christopher Dodd (D) of Connecticut, who chairs the Senate Banking, Housing and Urban Affairs Committee, flanked by other senior members of House and Senate banking panels.

“I now expect we will indeed have a package that can pass the House, pass the Senate, and be signed by the president,” added Sen. Robert Bennett (R) of Utah.

Just minutes after that midday announcement, the top House Republican on the banking panel split ranks, however. “There was not a deal made,” said Rep. Spencer Bachus (R) of Alabama, in comments to reporters just off the House floor. “There was progress on the issues.”

At issue are two narratives that converged at the White House today: One is how to rescue a battered financial market; the other, how to revive a slumping presidential campaign.

Key lawmakers on Capitol Hill moved quickly this week to come to terms on a sweeping $700 billion bailout. Conservatives on both sides of the aisle balked at the size of the bailout and the vast expansion of government authority that it implied. Lawmakers across the spectrum worried that the Treasury Department’s three-page plan included no oversight ¬ and even ruled out challenges from the court.

Both the Senate and House produced draft bills, but wide areas of disagreement persisted.

Without releasing details of their proposal, which they said had yet to be vetted with the Treasury Department, lawmakers said they had come to terms on four contested areas. These include: authority for the Treasury Secretary to rid financial markets of “toxic” assets, limits on CEO compensation for companies seeking taxpayer help, new oversight capacity, and provisions for homeownership preservation.

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