WASHINGTON Scrambling for a swift deal on the $700 billion bailout for failing financial firms, key Democrats and Bush administration officials agreed Monday to include mortgage help for beleaguered homeowners but wrangled over other issues, including "golden parachutes" for executives who benefit from the unprecedented rescue.
Democrats demanded that 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, and also at a proposal by Democrats to let judges rewrite mortgages to lower bankrupt homeowners' monthly payments.
President Bush prodded Congress during the day to pass the rescue plan quickly, declaring, "The whole world is watching."
Rep. Barney Frank, D-Mass., the House Financial Services Committee chairman, who is leading negotiations with Treasury Secretary Henry Paulson, 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.
Congressional aides said the House could act on a bailout bill as early as Wednesday, but leaders emerged from a closed-door meeting late Monday with no firm timetable for action.
House Speaker Nancy Pelosi, D-Calif., said only that leaders were working to give the markets confidence that "this legislation will pass, and it will pass soon."
However, Wall Street wasn't comforted by the progress of the talks. The Dow Jones industrials 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. And despite encouraging talk on Capitol Hill, lawmakers on both the right and left were already 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 globe.
In one expansion of its original proposal, the administration is asking for broad power to buy up virtually any kind of bad asset including credit card debt or car loans from any financial institution in the U.S. or abroad in order to stabilize markets.
Sen. Chris Dodd, D-Conn., the Banking Committee chairman, 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 there was no agreement yet 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 acquires in the rescue. A government official with knowledge of the talks confirmed the administration backs those provisions.
On the campaign trail in Pennsylvania, John McCain, the GOP presidential hopeful, called for a bipartisan oversight board to supervise the proposed bailout to be led by Warren Buffett or another widely respected business leader.
McCain suggested his one-time rival for the GOP nomination, former Massachusetts Gov. Mitt Romney, and New York Mayor Michael Bloomberg be part of the effort as well. Both men made multimillion-dollar fortunes in business before entering politics, and Romney turned around the scandal-ridden 2002 Winter Olympic Games in Salt Lake City.
McCain's rival, Democrat Barack Obama, linked the turmoil that's rocked Wall Street to federal spending he said has soared out of control during the Bush administration. That type of spending, he said, is sure to continue if McCain is elected to the White House.
"We cannot give a blank check to Washington with no oversight and accountability, when no oversight and accountability is what got us into this mess in the first place," said Obama.
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, Sen. Richard C. Shelby of Alabama, 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. Conservative House Republicans and liberal House Democrats both and huddled privately to express their concerns.
A partisan battle was brewing over the bankruptcy provision for homeowners' mortgage payments, a key 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 Sen. Mel Martinez, R-Fla.
Investors were uncertain just how successful the administration's plan would be in unfreezing credit markets, which many businesses depend on to fund day-to-day operations, and for propping up the still-weak housing market.
Bush said, "Obviously, there will be differences over some details, and we will have to work through them. That is an understandable part of the policymaking process." But he also said, "It would not be understandable if members of Congress sought to use this emergency legislation to pass unrelated provisions, or to insist on provisions that would undermine the effectiveness of the plan."
Treasury spokeswoman Brookly McLaughlin said, "We are confident that we can get a bill done this week."