WASHINGTON (AP) - Scrambling for a swift deal on the US$700 billion bailout for failing financial firms, crucial Democrats and Bush administration officials agreed Monday to include mortgage help for beleaguered homeowners but wrangled over other issues that included unprecedented help for executives who would benefit from the rescue.
Democrats demanded the measure limit pay packages for executives of companies helped by the biggest financial rescue since the Great Depression.
The administration was balking at that, as it was over a proposal by Democrats to let judges rewrite mortgages to lower bankrupt homeowners' monthly payments.
President George W. Bush prodded Congress during the day to pass the rescue plan quickly, declaring, "The whole world is watching.''
Rep. Barney Frank, Democratic Financial Services Committee chairman in the House of Representatives, said the administration essentially had forced Congress to the negotiating table by creating an expectation in financial markets that a massive bailout was on the way.
"By the declaration that they made, by sending this proposal, I think we have to recognize the reality that we don't have a choice now of debating whether this is a good or a bad thing,'' said Frank, who was leading negotiations with Treasury Secretary Henry Paulson.
"We have gotten closer,'' Frank said, but "we're not there yet.''
Congressional aides said the House could act on a bailout bill as early as Wednesday. Leaders emerged from a private meeting Monday evening with no firm timetable for action.
House Speaker Nancy Pelosi, also a Democrat, said only that leaders were working to give the markets confidence that "this legislation will pass, and it will pass soon.''
However, markets were not comforted by the progress of the talks.
On Wall Street, the Dow Jones industrial average plummeted 372 points. Oil prices soared $25 a barrel at one point, and gold prices surged anew as investors searched for a safe place to park their money.
Despite encouraging talk in Congress, lawmakers on both the right and left already were assailing the deal-in-progress.
The emergency legislation would give the government broad power to buy up devalued assets from troubled financial firms in a bid to unlock the flow of credit and stabilize badly shaken markets in the United States and around the world.
In an expansion of the original proposal, the administration is asking for broad power to buy up virtually any kind of bad asset, even credit card debt or car loans, from any financial institution in the United States or abroad in order to stabilize markets.
Democratic Sen. Chris Dodd, chairman of the Senate Banking Committee, has proposed granting that request; Frank said he was working to limit the bailout to mortgage-related investments.
Differences remained with the administration on Democrats' proposal that the government take an ownership stake in the troubled companies it bails out so that taxpayers could benefit from future profits.
Frank said Paulson had accepted the idea in principle, but several staff aides at work on the plan said no agreement had surfaced on how the concept would work.
Frank said he and Paulson had agreed to create a congressional oversight board as part of the bailout and to mandate that the government come up with a plan to avoid foreclosures on any mortgages it should acquire in the rescue.
A government official with knowledge of the talks confirmed the administration backs those provisions.
As for tottering financial firms, there still were divisions on which would be helped and what kind of assets the government could buy as part of the bailout.
And in a fresh sign of a challenging road ahead, Republican Sen. Richard C. Shelby, the top Banking Committee Republican, blasted the emerging plan as "neither workable nor comprehensive.''
"In my judgment, it would be foolish to waste massive sums of taxpayer funds testing an idea that has been hastily crafted and may actually cause the government to revert to an inadequate strategy of ad hoc bailouts,'' Shelby said.
Lawmakers on both extremes of the political spectrum assailed the plan as a massive, poorly conceived bailout.
A partisan battle was brewing over the bankruptcy provision for homeowners' mortgage payments, a principal Democratic demand.
"We'll see how hard they fight - it's something we care about,'' Frank said.
Lawmakers in both parties appeared to be coalescing around the idea that executive compensation limits should be part of the bailout, although Paulson is said to be concerned that such curbs would discourage companies from participating.
"Some element of that has to be in this package,'' said Republican Sen. Mel Martinez. - AP
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