Significant progress on bailout: Senate leader

WASHINGTON: Congressional leaders said Saturday they hoped to reach an agreement on a multibillion-dollar bailout plan for the financial sector before the markets open Monday, even if House and Senate votes would come later.

"The goal is to come up with a final agreement by tomorrow," Senate Majority Leader Harry Reid, D-Nev., said during an unusual weekend session of Congress. "We may not be able to do that, but we're trying very hard."

He said he hoped for an announcement by 6 p.m. EDT Sunday, just hours before the Asian markets open again. "Everybody is waiting for this thing to tip a little bit too far," he said, so "we may not have another day."

President Bush expressed confidence that lawmakers soon would approve a rescue plan. He acknowledged that many Americans are frustrated and angry that up to $700 billion in tax dollars may be needed to cover Wall Street firms' mistakes.

The bailout is intended to rescue bankers from bad loans that threaten to derail the economy and plunge the country into a long depression. Lawmakers likened the situation to a major car wreck that has backed up traffic ��� credit, in this case ��� for miles. The rescue is meant to remove the wreckage so credit can start moving to borrowers again.

The main sticking point is with House Republicans. They object to several parts of the Bush administration's approach, developed largely by Treasury Secretary Henry Paulson.

Negotiators on Saturday sought to accommodate enough of their demands to entice a reasonable number of House Republicans to back the eventual plan, which is nearly certain to be unpopular with many voters.

Democrats and administration officials said they were willing to include House Republicans' idea of having the government insure distressed mortgage-backed securities ��� but only as an option, not a replacement for the broader idea of buying outright those toxic securities.

"There may be a way in which that could be accommodated as part of the toolbox" available to the Treasury Department, said Sen. John Thune said after Republican senators were briefed on the negotiations. "As a practical matter, that can't be the engine that drives this bill," said Thune, R-S.D.

Negotiators also discussed phasing in the program's costs. For example, after the first $350 billion is made available, Congress could try to block later amounts, which could total an additional $350 billion, if it believed the program was not working. The president presumably could veto such a move, however, requiring extra large margins in the House and Senate to override.

Some Democrats still want a provision allowing bankruptcy judges to rewrite mortgages to help homeowners avoid foreclosure. Thune said that would be "a deal-breaker" for Republicans.

The compromise legislation that seemed to be emerging Saturday "is not the proposal that we got from Secretary Paulson," Reid said. But lawmakers said it would be much closer to Paulson's original plan than to the alternative offered by House Republicans several days ago.

Some House Republicans continued to resist a plan that might move quickly once drafted and might include only modest portions of their alternative.

"There must be no rush to misjudgment regarding this critical threat to America's economic future for generations to come," said Rep. Thaddeus McCotter, R-Mich. "All Americans want responsible progress toward a positive, pro-taxpayer solution."

The debate has divided Republicans more so than Democrats, with Bush struggling to salvage the main elements of his plan from attacks by members of his own party.

Some Republicans have taunted Democrats, saying Democrats could pass the bill without GOP help because they control both the House and Senate. With the Nov. 4 election only weeks away, Democrats have refused to push anything that appears to be a sharply partisan plan, which Republicans could then use against them. Even some Republicans have defended them.

"You can't have a deal" on an issue this large when "a large part of the body" refuses to go along, Sen. Lindsey Graham. R-S.C., said in an interview.

New details emerged over the weekend of a remarkably tumultuous White House meeting on the bailout Thursday. With the session breaking up in disarray, according to two participants, Bush issued an appeal, saying, "Can't we just all go out and say things are OK?"

The group around the table, which included congressional leaders and the presidential nominees_Republican John McCain and Democrat Barack Obama _spurned the request. The participants spoke on condition of anonymity because the meeting was private.

In an Associated Press-Knowledge Networks poll, only 30 percent of those surveyed expressed support for Bush's package. Forty-five percent were opposed, with 25 percent undecided. The survey was conducted Thursday and had a margin of error or plus or minus 3.8 percentage points.