Congress Pledges Action

Rescue Talks Coming With White House as Differences Surface
By GREG HITT SEPTEMBER 20, 2008, Wall Street Journal


WASHINGTON -- Congressional leaders Friday vowed speedy action on a rescue plan for U.S. financial markets. But dangers lurked on Capitol Hill, as Democrats pushed for additional measures to aid the economy and conservative Republicans griped about the huge government bailout.

With a little more than 40 days to go before an election where control of both the White House and Congress are up for grabs, some lawmakers suggested the market-rescue package should offer fresh relief to troubled borrowers.

Doing so, however, could turn the bill into a "Christmas tree," by hanging unrelated measures on it and perhaps endanger its passage. Meanwhile, finance-industry lobbyists began fighting to block certain proposals, such as limits to executive pay.

Lawmakers from both parties and Bush administration officials plan negotiations over the weekend to pull together details of the program. A centerpiece of the proposal will be a new government authority empowered to buy hundreds of billions of dollars in bad securities and loans from troubled financial institutions.

The White House is urging Congress to act rapidly to calm turbulent markets. Democratic leaders said they hope to push the measure through the House and Senate by the end of next week.
House Speaker Nancy Pelosi said Democrats "are committed to quick, bipartisan action." A spokesman for Senate Majority Leader Harry Reid said the Nevada Democrat intends to "move heaven and earth" to get the bill done, though in a private meeting late Thursday night he was less sanguine, warning it can take a couple of days in the Senate "to pass a bill to flush the toilet," congressional officials said.

Just a few days ago, Mrs. Pelosi and Mr. Reid were saying they didn't expect major action on financial-markets issues before the current session ends. But that turned around overnight on Thursday after briefings from Treasury Secretary Henry Paulson, Federal Reserve Chairman Ben Bernanke and others.

Senate Banking Committee Chairman Chris Dodd (D., Conn.) said the looming threats to the U.S. economy outlined by Mr. Paulson in a meeting with lawmakers late Thursday have galvanized lawmakers. "I've been here 28 years. I've never been in a more sobering moment," Mr. Dodd said Friday.

Until Friday, Capitol Hill was mired in partisan bickering over gas prices, an ethics inquiry into a top Democratic committee chairman and finger-pointing over the state of the teetering economy. But those issues have receded in the face of the crisis in the credit markets.

"Members of Congress need to set politics aside," said Missouri Rep. Roy Blunt, the House's second-ranking Republican, in comments echoed across Capitol Hill.

"We're all on the same page," said Sen. Jon Tester (D., Mont.), after emerging from a closed-door meeting of the Senate Banking Committee. "We understand this is bigger than anything we've faced in a long, long time."
New Hampshire Sen. Judd Gregg, the senior Republican on the Senate Budget Committee, pegged the cost of the bailout at "somewhere in the $500 billion range." Alabama's Richard Shelby, the senior Republican on the Senate Banking Committee, said the final figure could be closer to "a trillion dollars."

For Democrats, the unfolding crisis is forcing difficult choices about the party's priorities ahead of the election. Democratic leaders want the White House to support additional measures to stimulate the economy, such as expanded jobless benefits. Mrs. Pelosi pressed Mr. Paulson on that issue Friday.

At this point, the administration is deflecting the Democratic overtures. But the unfolding crisis could give Democrats new leverage to wring concessions from the White House: either in a must-pass budget bill later this month or the emerging financial-services bill.

Mr. Dodd said the financial-services bill shouldn't become a "Christmas tree" but should reflect Democratic priorities. One idea bandied about among Democrats would create a special funding mechanism that would help homeowners get out from underneath troubled mortgages.

Another proposal would give federal bankruptcy judges enhanced authority to adjust mortgages to prevent borrowers from tilting into foreclosure. Banking-industry lobbyists say they will fight proposals to amend mortgages in bankruptcy.

Mr. Tester said the goal is to make sure "we don't do something that makes Wall Street happy, but doesn't take care of Main Street."

House Republican Leader John Boehner (R., Ohio) urged Congress and the administration to keep the bill "as simple and straightforward as possible," warning any attempt to "score political points or fit a partisan agenda" into the measure will only delay action.

So far, no one on Capitol Hill was moving to openly oppose the administration plan. But in Republican ranks, conservatives were growing restless with the steady drumbeat of government intervention.