Make us your home page

Today’s top headlines delivered to you daily.

(View our Privacy Policy)

GOP revolt puts loan bailout in doubt

WASHINGTON — A Republican revolt stalled urgent efforts to lash together a national economic rescue plan Thursday, a chaotic turnaround on a day that had seemed headed for an agreement.

Instead, the talks dissolved into a verbal brawl in the Cabinet Room of the White House, warnings from an angry president and pleas from a treasury secretary who — half-jokingly — dropped to one knee and pleaded with the lawmakers.

"If money isn't loosened up, this sucker could go down," President Bush declared Thursday as he watched the $700-billion bailout package fall apart before his eyes.

Weary congressional negotiators worked into the night, joined by Treasury Secretary Henry Paulson, to revive or rework the plan. They gave up after 10 p.m., more than an hour after the lone House Republican involved, Rep. Spencer Bachus of Alabama, left the room.

Democrats blamed the House Republicans for the stalemate. Conservatives have complained that the plan would be too costly for taxpayers and would be an unacceptable federal intrusion into private business.

The implosion spilled out from behind closed doors into public view in a way rarely seen in Washington and left uncertain the fate of efforts to bail out failing financial institutions and restart the flow of credit that has begun to starve the national economy. Talks were to resume this morning.

When congressional leaders and Sens. John McCain and Barack Obama trooped to the White House Thursday afternoon, all signs pointed toward a bipartisan compromise that could be signed into law by the weekend.

"We're in a serious economic crisis," Bush said as the meeting began shortly before 4 p.m. in the Cabinet Room, adding, "my hope is we can reach an agreement very shortly."

Key Democrats and Republicans had announced they had the outlines of a tentative agreement just hours before the White House meeting. That accord would have given the Bush administration just a fraction of the money it wanted up front, subjecting half the $700-billion total to a congressional veto.

But conservatives were still in revolt, balking at the astonishing price tag of the proposal and the hand of government that it would place on private markets.

Once the doors closed, the House Republican leader, Rep. John Boehner, surprised many in the room by declaring that his caucus could not support the plan to allow the government to buy distressed mortgage assets from ailing financial companies.

Boehner pressed an alternative that involved a smaller role for the government, and McCain, whose support of the deal is critical if fellow Republicans are to sign on, declined to take a stand.

The talks broke up in angry recriminations and were followed by news conferences and partisan finger-pointing.

It was the very outcome the White House had intended to avoid, with partisan presidential politics appearing to trample delicate congressional negotiations.

Sen. Christopher Dodd, D-Conn., the chairman of the Senate banking committee, denounced the session as "a rescue plan for John McCain" in an interview on CNN, and proclaimed it a waste of precious hours that could have been spent negotiating.

A top aide to Boehner, Kevin Smith, said Republicans revolted over what they saw as an attempt by Democrats to jam through an agreement early Thursday and deny McCain an opportunity to participate in the agreement.

Sen. Richard Shelby of Alabama, the top Republican on the Senate Banking Committee, emerged from the session to say the announced agreement "is obviously no agreement."

News of an apparent breakthrough earlier in the day had helped inspire Wall Street, which recorded a 196-point gain for the Dow Jones industrials. The later breakdown seemed likely to send stocks downward again today.

One group of House GOP lawmakers circulated an alternative Thursday that would put much less focus on a government takeover of failing institutions' sour assets. This proposal would have the government provide insurance to companies that agree to hold frozen assets, rather than have the United States purchase the assets.

Rep Eric Cantor, R-Va., said the idea would be to remove the burden of the bailout from taxpayers and place it, over time, on Wall Street instead.

The price tag of the administration's plan to bail out tottering financial institutions — and the federal intrusion into private business matters — have been major sticking points for many Republican lawmakers.

"I'm feeling somewhat puzzled at this point," said Rep. Barney Frank, D-Mass., the Financial Services Committee chairman who has been leading negotiations with Paulson. "Sen. McCain and the president between them ought to be able to get House Republicans back to the table."

Information from the New York Times and Washington Post was used in this report.

Feds take over WaMu

In the largest bank failure in U.S. history, regulators seize control of Washington Mutual and simultaneously broker a sale of the lender to J.P. Morgan Chase. Deposits are guaranteed, but some shareholders could be wiped out. 7A

$25,367 in gifts to Palin

Sarah Palin accepted 41 gifts in her 20 months as Alaska governor. Also, hear more from her CBS interview. 7-8A

GOP revolt puts loan bailout in doubt 09/25/08 [Last modified: Sunday, September 28, 2008 12:24pm]
Photo reprints | Article reprints

© 2017 Tampa Bay Times


Join the discussion: Click to view comments, add yours

  1. Forecast: Warm, humid weekend ahead of big cool-down for Tampa Bay


    The weekend kicks off warm and dry on Friday across Tampa Bay with mostly sunny skies and temperatures in the upper 80s.

  2. U.S.-backed Syrian force declares victory over Islamic State in Raqqa


    BEIRUT — A U.S.-backed Syrian force declared victory over the Islamic State group in its former "capital" of Raqqa on Friday, declaring the northern Syrian city free of any extremist presence.

    This Thursday, Oct. 19, 2017 frame grab made from drone video shows damaged buildings in Raqqa, Syria two days after Syrian Democratic Forces said that military operations to oust the Islamic State group have ended and that their fighters have taken full control of the city. [Associated Press]
  3. Florida education news: Lawsuits, lawyers, school board pay and more


    IN COURT: A former Hillsborough County school district top administrator sues the School Board and its chief of staff, alleging board member corruption and …

    Hillsborough School Board member Susan Valdes is the subject of several allegations in a former employee's scathing lawsuit.
  4. Clearwater eyes hiring new downtown director within two months

    CLEARWATER — Now that the city director tasked with revitalizing downtown has resigned after his arrest on a battery charge during Oktoberfest, City Manager Bill Horne said the goal is to not leave the position vacant long.

    Clearwater Assistant City Manager  Micah Maxwell will oversee downtown until the city hires a replacement for Seth Taylor.
  5. Tampa Bay's Top 100 Workplaces deadline extended to Nov. 17


    Think you work at one of the best places in Tampa Bay? You've got a little more time to make a pitch.

    Penny Hoarder and Gregory, Sharer & Stuart were among those at an event in Tampa last May honoring winners of the Tampa Bay Times Top Workplaces awards. Nominations are now open for this year.  
[OCTAVIO JONES   |   Times]