Leaders plead for a yes today

Skepticism remains as House approaches vote on $700b bailout

House Speaker Nancy Pelosi announced the deal on the financial bailout bill. With her (from left) are Senator Judd Gregg of New Hampshire, Senate majority leader Harry Reid, and Treasury Secretary Henry Paulson. (Lauren Victoria Burke/ Associated Press)

WASHINGTON - House and Senate leaders yesterday anxiously pleaded with skeptical lawmakers to accept a bipartisan $700 billion financial bailout plan, saying the package was crucial to calm the markets and stave off what they warned could be the worst economic crisis since the Great Depression.

Failure to approve the package, which bleary-eyed House and Senate negotiators agreed to early yesterday morning, would cause "an event which we don't want to conceive" of, said Senator Judd Gregg, Republican of New Hampshire and a lead negotiator of the package.

The House is set to vote on the bill today, and the Senate is expected to consider it later in the week.

Representative Barney Frank, a Newton Democrat and the chairman of the House Financial Services Committee, would not predict whether leaders had the support to pass the package. But he stressed that "serious harm will come" if the measure is not approved.

"Lending will cease," Frank said. "We have already seen a failure in financial institutions unlike anything since the Great Depression - anything."

President Bush called again on lawmakers yesterday to pass the measure, saying, "Without this rescue plan, the costs to the American economy could be disastrous."

Both presidential candidates offered tentative support for the package yesterday, as negotiators worried that further delay would escalate the credit crunch and lead more financial institutions into ruin. In the most recent episode, Wachovia Corp. faces a possible emergency takeover, as Citigroup Inc. and Wells Fargo amp; Co. engaged in a bidding war yesterday for the company, The New York Times reported.

"This is something that all of us will swallow hard and go forward with," said GOP nominee John McCain, who returned to Washington last week to spur negotiations on the package. Many Republicans said the move helped advance the bill, but some Democrats said it caused delay.

Democratic nominee Barack Obama sought credit for the taxpayer protection provisions that negotiators helped get in the bill, saying he was "pushing very hard and involved in shaping those provisions."

Some lawmakers in both parties said they were reluctant to vote for the highly unpopular bill, saying their constituents saw it as an unfair taxpayer rescue of an industry that had run itself into the ground with bad business decisions. "My vote will not be 'no,' but 'hell, no,' " said Representative Dennis Kucinich, Democrat of Ohio.

Gregg said he expects the measure would ultimately pass both chambers of Congress, but individual members said a substantial number of lawmakers in both parties still disliked the bill.

The measure would allow the federal government to buy up as much as $700 billion in distressed mortgage-backed securities, freeing up the credit market so that individuals can get car loans, mortgages, and student loans.

The money would be approved in three installments - $250 billion to start, then $100 billion at the request of the president, and $350 billion more later. Congress received the authority to stop it the third payment, subject to a presidential veto.

Executive compensation and so-called "golden parachutes" - big payouts to departing business executives - would be severely restricted for companies benefiting from the plan. Participating companies would also be required to sell some of their bad assets to provide warrants for the federal government, a plan meant to ensure that taxpayers would benefit from any future growth in those companies.

An oversight board would be created, and after five years, if the government had lost money on the deals, the president would be required to submit legislation to tax financial companies to recoup the losses. The government would also seek to help homeowners by requiring Treasury and other federal agencies to modify home loans, when possible to avoid foreclosures.

"This isn't about a bailout of Wall Street, it's a buy-in, so that we can turn our economy around," said House Speaker Nancy Pelosi, Democrat of California.

While the $700 billion figure made eyes pop on Capitol Hill and in lawmakers' districts, Gregg vehemently repeated that the actual cost would not be that high, since the government would eventually sell the assets once the housing market had stabilized, perhaps making some cash on the deal.

"We may lose some money. We may break even. We may make some money," Gregg said. "My gut tells me we are going to make money for the taxpayers."

Pelosi and House minority leader John Boehner, Republican of Ohio, huddled with their caucus members in separate, closed sessions yesterday evening to explain the package to skittish lawmakers.

Boehner said he did not know how many of his fellow Republicans would vote for the measure. "I'm asking every member of our caucus whose conscience will let them to vote for this bill," Boehner said after emerging from a grueling 3 1/2-hour meeting with the GOP caucus last night.

Congressional negotiators in both parties, as well as the White House, want a bipartisan vote to send a soothing message to the markets and to ensure that neither party is disproportionately punished by frustrated voters.

"There's a perception [among voters] that the people on Wall Street who behaved badly are going to be protected, and people on Main Street don't get a lot," said Representative Jim McGovern, a Worcester Democrat, who said he is undecided on the bill.

Lawmakers in both parties complained that they were being asked to vote quickly on a massive package without being given the chance to read it carefully. Representative Brad Sherman, a California Democrat, met with skeptics of the deal yesterday and reported that there was "a range of opinions, from 'hold your nose and vote for it,' to 'vote no,' to 'scream no.' "

The package is the latest in a series of Bush administration initiatives that have angered the party's conservative wing, many of whose members believe the GOP has abandoned its philosophical commitment to smaller government, less regulation, and reduced debt.

Some conservative Republicans said the bailout package was another retreat from GOP principles - and said their constituents wouldn't like it.

Representative Walter Jones, Republican of North Carolina, said his office had been deluged with calls on the bailout, and that he took more than 40 of the calls himself. None, he said, was in favor of the package. "You can't do this to the American people - it's unfair," Jones said, adding that he had decided to vote against the plan. "I'm at peace with my God," he said.