Bailout Plan Gaining Steam on Hill; McCain Wants Bigger Role

Paulson met behind closed doors earlier in the day with Pelosi and Boehner.

Lawmakers on both sides of the aisle started demanding that the administration fine tune the details of its proposal almost as soon as it was unveiled Sept. 20. The initial Treasury plan was only three pages long and gave the department wide latitude to run the program with little oversight.

On one major sticking point, limiting executive compensation, Paulson told the House Financial Services Committee, “I believe we need to figure out some way to incorporate it into this plan, but it has to be incorporated in a way so the plan can still be effective.”

Frank said Paulson had some “different views” than lawmakers on exactly how to curtail executive pay, but Treasury would accept the general principle.

Reflecting a change in tone from the fierce criticism lawmakers leveled at the administration plan on Tuesday, Sen. Charles E. Schumer , D-N.Y., chairman of the Joint Economic Committee, said: “Over the last 24 hours, I’ve seen signs of greater cooperation from my colleagues in Congress, who, despite many of their well-founded reservations, recognize the magnitude of the problems we face and the importance of getting something done.... We’re better off today in getting this bill done than we were yesterday,” thanks to the testimony by Paulson and Federal Reserve Chairman Ben S. Bernanke before a series of congressional committees and their private meetings with lawmakers of both parties.

Enter McCain

Republican presidential nominee Sen. John McCain of Arizona injected himself more directly into the debate Wednesday afternoon when he announced he was suspending his campaign to return to Washington to work on the plan after concluding that current proposals do not have enough support to be enacted. McCain’s decision adds an uncertain element to already delicate talks on Capitol Hill.

While Republicans welcomed the move, Democrats dismissed it as a stunt and said it would not be helpful to inject presidential politics into the discussions.

The plan continues to meet resistance from many rank-and-file members of Congress, who are reflecting the outrage voiced by their constituents at the idea of committing hundreds of billions of taxpayer dollars to rescue Wall Street companies from the consequences of their bad decisions.

Sen. Jim DeMint signaled his intention to put the brakes on any legislation to implement the plan that starts moving.

“I’m going to ask for a debate and [the Democrats] will call that a filibuster,” DeMint said, adding that his goal is to “not stop the will of the Senate, but to at least have enough time and an honest debate. .. even if it means come back next year.”

But the administration appeared to be making headway in winning over reluctant members, in part by repeatedly stressing that failure to act would devastate Main Street, not just Wall Street.

“Today was better,” said Rep. Spencer Bachus of Alabama, ranking GOP member on the House Financial Services Committee, after Paulson and Bernanke appeared before the House GOP Conference on Wednesday morning. “There is a realization that we have to do something and that we can’t leave town until we do.”

Bailout Plan Gaining Steam on Hill; McCain Wants Bigger Role

Concerns About ‘Message’

Rep. Scott Garrett , R-N.J., said members’ “message to Paulson was that you have to make sure the public understands the ramifications” of a financial collapse that the administration is warning against. “The message today was that the messaging needs to be better,” Garrett added.

Rep. Gary G. Miller , R-Calif., said his calls on the bailout plan “are running 150-to-one against it.”

“People are looking at this as nothing but a big bailout for fat cats on Wall Street. I’m not concerned about the fat cats. I’m concerned about the people working hard to make a living or get a bank loan,” Miller said.

Rep. Thomas M. Davis III , R-Va., suggested the involvement of and McCain and his Democratic rival, Sen. Barack Obama of Illinois, could help with rank-and-file members.

“McCain can talk to members,” Thomas said. “There’s a lot of denial among members that this is needed. I think he and Obama can do something” because they are now the leaders of their parties in an extraordinary circumstance.

Democratic leaders have warned that they will only pass a bill with a sizable amount of Republican support since they feel the financial situation is the Bush administration’s fault.

“Where is President Bush?” Senate Majority Leader Harry Reid , D-Nev., asked on the Senate floor Wednesday, saying that aside from a few brief statements, Bush has not been engaged on his proposed $700 billion bailout of the financial industry. “We must not forget that President Bush is still president of the United States. It’s time for him to realize that the buck stops with him.”

The White House announced that Bush will deliver a televised address on the economy at 9:01 p.m. EDT Wednesday.

A member of the House Republican leadership said Wednesday that the Republican and Democratic presidential nominees should get directly involved in talks over a financial industry bailout.

“It would be helpful if McCain and Obama stood up and said they want to be part of this,” said Rep. Kay Granger of Texas, vice chairwoman of the House Republican Conference.

She added that whatever legislation is eventually agreed to in negotiations between Congress and the Bush administration should be endorsed by the two nominees before Congress votes on it.

Changes Coming

Bailout Plan Gaining Steam on Hill; McCain Wants Bigger Role

Bachus said the changes being discussed by the administration did not reduce the overall cost of the plan. “The message was that this is very serious and we need to stay here and resolve this,” Bachus said.

“I’ve always thought the initial proposal had to be changed,” he said. “I think the administration is beginning to accept that. But I don’t think the bottom-line number is being discussed right now.”

The bill is expected to include tough new accountability provisions, curbs on executive compensation at companies participating in the bailout, steps to help prevent more foreclosures and an equity stake for the government in the companies that offload their bad debts.

While the administration presses its case, R. Bruce Josten, executive vice president of the U.S. Chamber of Commerce, has been making the rounds on the Hill, spending most of his time getting members up to speed on the intricacies of the crisis and the need for action.

On Wednesday, the Chamber put its substantial lobbying clout behind the rescue plan, sending a letter to the entire Congress pushing for quick agreement. “Failure to address such systemic fears could result in a complete lockup of the financial system with dire consequences for the economy as a whole,” Josten wrote.

He said that turmoil in the stock market may “very well be only the tip of the iceberg because a lockup in credit markets will cripple Main Street’s ability to operate and threaten taxpayer jobs and income.”

Alan K. Ota, Edward Epstein, Erin McNeill and Emily Ethridge contributed to this report.