WASHINGTON -- Congress and the Bush administration reached tentative agreement early Sunday on a sweeping $700 billion rescue plan to take bad assets off the books of banks and other financial firms. The deal was to be put on paper in the course of the day and sent to legislators for debate and a vote later in the week.
The two sides were racing a self-imposed deadline to get a deal by 5 p.m. CDT before Asian financial markets opened for business. A deal was announced in the wee hours by tired, puffy-eyed lawmakers who had been working almost around the clock to reach an accord.
As lawmakers neared the tentative deal, staff members had their cell phones confiscated to prevent leaks in what had become a heavily politicized negotiation. Lawmakers posted a copy of the deal online Sunday at www.financialservices.house.gov/ , ready for an angry American public to take a look at the compromise ahead of a congressional vote.
A tentative deal had been announced Thursday, until House Republicans balked. The new compromise gives Democrats more restrictions on the pay of Wall Street executives and a taxpayer stake if the program actually makes money. Republicans tacked on a parallel insurance plan that can work as an alternative to taxpayer funding and killed provisions that would have let federal judges modify distressed mortgages.
Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson have warned repeatedly that absent an urgent response, credit markets could collapse this week, punishing Wall Street and Main Street alike.
ADVERTISEMENT
"The deal should go a long way to stabilizing financial markets and putting the financial system on what will be a long road to recovery," said Mark Zandi, chief economist of economic forecaster Moody's Economy.com.
Democrats and Republicans won language that they will trumpet on the campaign trail in weeks ahead, and the White House can breathe easier that a financial collapse may be averted, for now at least.
"Nobody got everything they wanted," said Rep. Barney Frank, D-Mass, chairman of the House Financial Services Committee and one of the architects of the compromise, in a C-SPAN appearance Sunday morning.
Staffers warned Sunday that while they are confident the deal will pass, it's no certainty. House Republicans must be convinced that taxpayers will not somehow wind up paying billions to executives. The real test of the package's strength is likely later Sunday when GOP leaders present it to members.
