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US finance rescue stalls after stormy White House meeting (Roundup)

Sep 26, 2008, 10:54 GMT

Washington - Just hours after Congress appeared on the verge of agreement on an emergency rescue plan for the US financial system, a historic White House meeting turned stormy and broke up Thursday with no formal consensus on the controversial proposal. U.S. Senate Majority Leader Harry Reid (D-NV) and Sen. Chris Dodd (D-CT) (R) leave a news conference in Washington, DC on 25 September 2008. The two discussed the status of a financial bailout package and their earlier meeting at the White House with President George W. Bush as well as the two presidential candidates, Barack Obama and John McCain. EPA/BRENDAN HOFFMAN

U.S. Senate Majority Leader Harry Reid (D-NV) and Sen. Chris Dodd (D-CT) (R) leave a news conference in Washington, DC on 25 September 2008. The two discussed the status of a financial bailout package and their earlier meeting at the White House with President George W. Bush as well as the two presidential candidates, Barack Obama and John McCain. EPA/BRENDAN HOFFMANUS President George W Bush had called the urgent meeting with legislators, Democratic presidential candidate Barack Obama and legislative leaders at the behest of Senator John McCain, the Republican presidential nominee. Participants afterward said that McCain said little during the contentious meeting - and even may have played a spoiler role. Bush called the meeting hoping to seal consensus on his 700- billion-dollar rescue plan for a financial system in which credit has dried up amid the deepening crisis over bad mortgage debt. Tensions have escalated in Washington in the days since Bush and Treasury Secretary Henry Paulson realized the economy was headed for serious trouble - a 'long and painful recession,' Bush said Wednesday night - without a quick fix of cash to buy up the bad mortgage debt and related securities. By Thursday morning, it appeared Democrats and Republicans had reached agreement on the principles of the rescue plan that would include additions of bipartisan oversight, restrictions on executive salaries in firms benefiting from the deal and partial government ownership of the firms. But House Republicans mounted a serious challenge to the agreement and even proposed an alternative solution by the time officials headed to the White House, several officials said. Democratic Senator Chris Dodd suggested that McCain had ambushed the bipartisan agreement in an effort to boost his profile on his weakest issue, the economy, less than six weeks before the November 4 elections. Dodd described the most contentious moment at the White House as the point when McCain appeared to be supporting a proposal from conservative House Republicans, who what would be the largest intervention into the capital markets in US history. 'I'm not sure what John McCain said at the meeting,' said Dodd, who claimed that the Republican candidate had not make clear any of his ideas. Senate majority leader Harry Reid, who attended the White House meeting, said that McCain said 'nothing of substance' at the meeting about the 700-billion-dollar deal. Dodd charged that McCain's sudden decision to suspend his campaign and rush to Washington in the middle of delicate negotiations 'looked to me like a rescue plan for John McCain' instead of a rescue plan for the economy. The Democrats, who have held the majority in Congress for two years, are in the difficult position of having to work with the deeply unpopular Republican president to find a way to stave off full-blown financial panic. Republicans, especially in the House of Representatives, have raised the loudest condemnations against plan, which is anathema for the centre-right advocates of free markets. Democrats insist that a majority of Republicans in Congress get behind the bill, seeking the political cover of a bipartisan plan amid an increasingly angry public reaction to the idea that tax dollars will bail out the Wall Street firms whose messy investments caused the current crisis. After the meeting, Obama said it appeared there was a 'rough consensus' on the plan, though details remained to be resolved. Negotiations are to continue Thursday evening. In a subtle jab at his opponent, the Democratic nominee said he believed agreement had been reached 'even before John McCain and I even landed in Washington. Something happened in the intervening hours.' 'One of the concerns that I've had over the last several days is that when you start interjecting presidential politics into delicate negotiations, you can create more problems rather than less,' he said in a broadcast interview. 'Both Senator McCain and myself need to be very careful about how we inject ourselves into the process.' After McCain on Wednesday declared a unilateral suspension of his campaign, the two candidates released a joint statement urging a speedy adoption of the rescue plan and agreeing on the conditions suggested by Congress. The first Obama-McCain debate was slated for Friday night. McCain on Wednesday called for a delay in light of the national financial crisis and said he would not participate unless Congress had reached agreement on the plan. Obama plans to show up in Mississippi for the debate, calling it important for the candidates to 'explain our vision of where the economy needs to go. ... One of us is going to be in charge of this mess in four months.' 'My sense is we can do more than one thing at a time, and I think that's what's required of the president of the United States,' Obama said. McCain changed his message on Thursday, saying he was 'hopeful that we'll get enough of an agreement (Friday) that I'll make this debate.' Asked if he could suffer for appearing to be grandstanding, McCain, told NBC News: 'This is what I need to do for my country, and if that hurts me politically, well, I'll gladly take the penalty.'