Congressional Leaders Push for Changes to Paulson Bailout Plan
By Laura Litvan and James Rowley
Sept. 24 (Bloomberg) -- Congressional leaders are weighing new ways to revise a $700 billion Wall Street rescue plan after it became clear that U.S. Treasury Secretary Henry Paulson's proposal faces resistance from both Democrats and Republicans.
House and Senate Democratic leaders huddled late yesterday to pour over new strategies, including the possibility of approving only a $150 billion initial installment for the government to purchase troubled assets from financial firms. Senator Charles Schumer of New York, the No. 3 Senate Democratic leader, said Paulson couldn't use the full $700 billion before the Bush administration left office on Jan. 20.
``I know, ideally, you would like to just have as much as possible, but you are not going to use $700 billion in these three months,'' Schumer told Paulson at a Senate hearing.
Paulson said it would be a ``grave mistake'' to adopt Schumer's plan because it sent the wrong signal to the market and didn't give Treasury ``the tools to do the job.''
Leaders in both parties are working to shore up support for an effort to restore investor confidence. They also want to limit the risks for lawmakers who are being asked to vote on the biggest government intervention in the financial markets since the Great Depression, just six weeks before the elections.
Passage Not Certain
Senate Banking Committee Chairman Christopher Dodd and Senator Richard Shelby, the ranking Republican on the panel, told reporters after the hearing that there were serious questions that needed to be addressed before they can assess whether they'll be able to find middle ground. Passage this year isn't certain, Dodd said.
``I think the secretary now realizes that what he sent up is not just going to be rubber-stamped,'' Shelby said.
There was a groundswell of concern, if not outright opposition, over the proposal as lawmakers reacted to their constituents' objections. A Bloomberg/Los Angeles Times poll found that by a margin of 55 percent to 31 percent, Americans say it's not the government's responsibility to bail out private companies with taxpayer dollars, even if their collapse could damage the economy.
``There is growing discontent in the heartland of America over the transfer of nearly a trillion dollars of taxpayer money to Wall Street,'' said Representative Mike Pence, an Indiana Republican.
`Up in the Air'
Representative Chris Van Hollen of Maryland, who chairs the Democratic Congressional Campaign Committee, said after a meeting of House Democrats yesterday that it's ``up in the air right now'' whether the bailout proposal could gain enough support in his party to win House approval.
One White House aide described the give-and-take in Congress as part of the normal legislative process.
``This is sausage-making,'' Keith Hennessey, the director of President George W.
Bush's National Economic Council, said on Bloomberg Television. ``They are asking tough questions and we're doing our best to answer them.''
Senate Republicans said the Bush administration needs to sell the proposal better to address voters' concerns about the cost and the value of the asset-buyout program.
``As long as this is portrayed as a bailout for Wall Street, it's a loser,''
said Texas Senator John Cornyn, a member of the Republican leadership. It's important for proponents to ``explain why it's important for working families.''
Paulson, Bernanke
Paulson and Federal Reserve Chairman Ben S. Bernanke will have another chance to do just that today, with both scheduled to appear before the House Financial Services Committee at 2:30 p.m. Bernanke also has testimony at 10 a.m. before the Joint Economic Committee, chaired by Schumer.
House Financial Services Committee Chairman Barney Frank, who is leading negotiations with the administration on possible final legislation -- will try to bridge differences between House and Senate Democrats.
``We're focusing on trying to make sure that the Senate and the House are in sync,'' Frank, a Massachusetts Democrat, told reporters yesterday.
At a meeting yesterday morning, Vice President Richard Cheney appealed to Republicans in Congress to put aside their reservations and support the plan.
Cheney warned of a dire impact on financial markets if action isn't swift.
Gingrey, Cheney
Representative Phil Gingrey, a Georgia Republican, said the financial system was described at the meeting as being in ``gridlock,'' with institutions unwilling to make loans. He said he suspects most Republicans in the meeting haven't yet decided how they might vote when a final compromise with the administration emerges.
House Democratic leaders fielded tough questions from their own rank and file at a rival meeting in the basement of the Capitol in the early afternoon.
Representative John Yarmuth of Kentucky said Democratic leaders may give lawmakers more time to consider the issue.
``There is a lot of anxiety that we're being pressured into making a decision that should take more time,'' Yarmuth said.
In the Senate, Majority Leader Harry Reid said after a weekly meeting of Democrats that Congress may need more time.
``It's important that we get it right, not get it done fast,'' Reid said.
To contact the reporters on this story: Laura Litvan in Washington at [email protected];
Last Updated: September 24, 2008 00:20 EDT
By Laura Litvan and James Rowley
Sept. 24 (Bloomberg) -- Congressional leaders are weighing new ways to revise a $700 billion Wall Street rescue plan after it became clear that U.S. Treasury Secretary Henry Paulson's proposal faces resistance from both Democrats and Republicans.
House and Senate Democratic leaders huddled late yesterday to pour over new strategies, including the possibility of approving only a $150 billion initial installment for the government to purchase troubled assets from financial firms. Senator Charles Schumer of New York, the No. 3 Senate Democratic leader, said Paulson couldn't use the full $700 billion before the Bush administration left office on Jan. 20.
``I know, ideally, you would like to just have as much as possible, but you are not going to use $700 billion in these three months,'' Schumer told Paulson at a Senate hearing.
Paulson said it would be a ``grave mistake'' to adopt Schumer's plan because it sent the wrong signal to the market and didn't give Treasury ``the tools to do the job.''
Leaders in both parties are working to shore up support for an effort to restore investor confidence. They also want to limit the risks for lawmakers who are being asked to vote on the biggest government intervention in the financial markets since the Great Depression, just six weeks before the elections.
Passage Not Certain
Senate Banking Committee Chairman Christopher Dodd and Senator Richard Shelby, the ranking Republican on the panel, told reporters after the hearing that there were serious questions that needed to be addressed before they can assess whether they'll be able to find middle ground. Passage this year isn't certain, Dodd said.
``I think the secretary now realizes that what he sent up is not just going to be rubber-stamped,'' Shelby said.
There was a groundswell of concern, if not outright opposition, over the proposal as lawmakers reacted to their constituents' objections. A Bloomberg/Los Angeles Times poll found that by a margin of 55 percent to 31 percent, Americans say it's not the government's responsibility to bail out private companies with taxpayer dollars, even if their collapse could damage the economy.
``There is growing discontent in the heartland of America over the transfer of nearly a trillion dollars of taxpayer money to Wall Street,'' said Representative Mike Pence, an Indiana Republican.
`Up in the Air'
Representative Chris Van Hollen of Maryland, who chairs the Democratic Congressional Campaign Committee, said after a meeting of House Democrats yesterday that it's ``up in the air right now'' whether the bailout proposal could gain enough support in his party to win House approval.
One White House aide described the give-and-take in Congress as part of the normal legislative process.
``This is sausage-making,'' Keith Hennessey, the director of President George W.
Bush's National Economic Council, said on Bloomberg Television. ``They are asking tough questions and we're doing our best to answer them.''
Senate Republicans said the Bush administration needs to sell the proposal better to address voters' concerns about the cost and the value of the asset-buyout program.
``As long as this is portrayed as a bailout for Wall Street, it's a loser,''
said Texas Senator John Cornyn, a member of the Republican leadership. It's important for proponents to ``explain why it's important for working families.''
Paulson, Bernanke
Paulson and Federal Reserve Chairman Ben S. Bernanke will have another chance to do just that today, with both scheduled to appear before the House Financial Services Committee at 2:30 p.m. Bernanke also has testimony at 10 a.m. before the Joint Economic Committee, chaired by Schumer.
House Financial Services Committee Chairman Barney Frank, who is leading negotiations with the administration on possible final legislation -- will try to bridge differences between House and Senate Democrats.
``We're focusing on trying to make sure that the Senate and the House are in sync,'' Frank, a Massachusetts Democrat, told reporters yesterday.
At a meeting yesterday morning, Vice President Richard Cheney appealed to Republicans in Congress to put aside their reservations and support the plan.
Cheney warned of a dire impact on financial markets if action isn't swift.
Gingrey, Cheney
Representative Phil Gingrey, a Georgia Republican, said the financial system was described at the meeting as being in ``gridlock,'' with institutions unwilling to make loans. He said he suspects most Republicans in the meeting haven't yet decided how they might vote when a final compromise with the administration emerges.
House Democratic leaders fielded tough questions from their own rank and file at a rival meeting in the basement of the Capitol in the early afternoon.
Representative John Yarmuth of Kentucky said Democratic leaders may give lawmakers more time to consider the issue.
``There is a lot of anxiety that we're being pressured into making a decision that should take more time,'' Yarmuth said.
In the Senate, Majority Leader Harry Reid said after a weekly meeting of Democrats that Congress may need more time.
``It's important that we get it right, not get it done fast,'' Reid said.
To contact the reporters on this story: Laura Litvan in Washington at [email protected];
Last Updated: September 24, 2008 00:20 EDT
