Congressional Democrats on Sunday began to set their own terms for a plan to rescue the nation's financial institutions, including greater legislative oversight of the Treasury Department, more direct assistance for homeowners and limits on the pay of top executives whose firms seek help.
The Democrats' demands came as Treasury Secretary Henry Paulson blanketed the Sunday talk shows to promote the Bush administration's $700 billion bailout package, emphasizing it was needed not just for Wall Street, but for all Americans. He urged Congress to move swiftly to approve a “clean” rescue plan without tacking on extra programs.
The Bush administration proposal could be the largest government bailout of private industry in the nation's history, and it calls for nearly unfettered powers to the Treasury secretary. Despite its sweep, there is intense pressure to pass a rescue measure quickly, not only because the markets remain jittery but also because of lawmakers' desire to return to their home districts to campaign for re-election.
Still, competing interests were already complicating the negotiations, as Democrats pushed for assistance for distressed homeowners and for oversight authority of the bailout program. Some lawmakers also said they did not want to be rushed into approving extraordinary new powers for the Treasury secretary and the federal government without full consideration of the potential consequences.
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Both presidential nominees said there had to be more oversight of the Treasury Department than the Bush administration proposed in its three-page rescue plan that gave broad discretion to buy and sell billions of dollars' worth of assets.
Financial companies were already lobbying intensely to broaden the plan. And the Bush administration did indeed widen the scope by allowing the government to buy out assets other than mortgage-related securities.
Early signs indicate investors in Asia are reacting positively to the developments in Washington. Shares in Asia jumped in early trading on Monday morning.
Top Democrats and Republicans on Capitol Hill said they would act swiftly on the administration's request, but not without setting their own conditions.
“We will not simply hand over a $700 billion blank check to Wall Street and hope for a better outcome,” said House Speaker Nancy Pelosi, D-Calif. She added that the administration's proposal “does not include the necessary safeguards. Democrats believe a responsible solution should include independent oversight, protections for homeowners and constraints on excessive executive compensation.”
Congressional Republicans, too, put the Bush administration on notice that they would not simply rubber-stamp the bailout proposal but would insist on a number of changes.