With the future of Wall Street giants on the line, Congress is not clamoring for a say in who gets federal help and who does not – at least, for now.
Democrats say that the debacle in US financial markets is the responsibility of the Bush administration: The president touted the value of deregulation; let him sort out its consequences, if he can.
But top lawmakers on both sides of the aisle do want a quick accounting for how those decisions were made and what impact they're likely to have on US taxpayers in the future.
In the longer run, they're gearing up for a battle in the new Congress over an overhaul of the nation's regulatory structure, including the possible creation of new entities modeled after the Resolution Trust Corporation, which helped resolve the savings-and-loan crisis in the late 1980s.
"Apparently, the private market is so messed up it may not be able to function unless there is more systematic federal relief in the sense of taking over some bad assets," said Rep. Barney Frank (D) of Massachusetts, who chairs the House Financial Services Committee.
Coming on the heels of a weekend decision by federal regulators not to back investment bank Lehman Brothers, Tuesday's $85 billion bailout of American International Group Inc. (AIG) took lawmakers by surprise.
"An $85 billion loan is a staggering sum and is just too enormous for the American people to bear the risk; Congress will demand answers to prevent this from happening again," said House Speaker Nancy Pelosi in a statement after meeting with Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke on Tuesday.
Senate majority leader Harry Reid announced on Wednesday that he plans to hold the Senate in pro forma sessions after the November elections, so that oversight committees can continue working on the financial crisis.
"Secretary Paulson said this would have to take place in the next administration because there's just so much that has to be determined," he said.
First step: Extensive rounds of oversight hearings, beginning this week and carrying on through the traditional fall recess. This week and next, House and Senate banking panels are summoning federal regulators to field questions on issues ranging from the response to bank failures and the government takeover of mortgage giants Fannie Mae and Freddie Mac to turmoil in US credit markets.
But lawmakers are already looking to fall elections and a new administration thereafter to settle the issue of what changes in the nation's regulatory framework may be needed – or politically possible.
"They gave every impression, these two good men, that they are attempting to do the best they can to understand America's financial institutions and the problems with them," said Senator Reid in a statement on the floor on Wednesday. "But the good intentions of these two decent men cannot escape the reality: the Bush administration's willful neglect of oversight and overzealous embrace of big business is directly responsible for the crisis we now face," he added.
Republicans, also caught by surprise by the AIG announcement, cautioned the Democrats not to turn the nation's financial crisis into a partisan argument.
"Now more than ever is the time to rise above politics and work together," said Senate Republican leader Mitch McConnell in a floor speech on Wednesday. "Our constituents don't want campaign speeches and hyperpartisan accusations – they want security for their home and savings. They want energy security and lower costs for gas and oil. And they want protection from future tax hikes on their income," he added.
Privately, some GOP leaders complained that the Bush administration had left them out of the loop. Had GOP presidential nominee Sen. John McCain had an inkling of the AIG announcement, for example, he might not have declared on Monday that the fundamentals of the US economy were strong – now a key Democratic talking point in the fall election campaign.
Meanwhile, the pace of the financial crisis is overwhelming the capacity of Congress to take a lead role in the government's response.
"Actions that were inconceivable just days ago are now occurring in a manner and at a pace that is certainly cause for concern," said Sen. Christopher Dodd (D) of Connecticut, who chairs the Senate Banking Committee, in a statement.
In coming days, the banking panel will be asking "crucial questions on behalf of the American people," he added. These include: How will the AIG bailout and others affect taxpayers? To what extent will it calm the markets or add to the uncertainty? And does this administration have a coherent strategy to put the economy on a stronger footing?
Democrats say the public should not expect a solution overnight – or even a template for determining which firms or industries will be helped.
"I don't think anyone has the magical solution of 'yes' for one industry and 'no' for another, but we are traveling a precarious path," said Sen. Patty Murray (D) of Washington, who serves as Democratic Conference Secretary.
"This administration has created this problem over a very long period of time and they're scrambling to find the right balance in a very quick amount of time," she adds.