President Bush appealed to the nation Wednesday night to support a $700 billion plan to avert a meltdown on Wall Street, and he invited both major presidential candidates to join him and congressional leaders at the White House today to forge a bipartisan compromise.
Warning that “a long and painful recession” could occur if Congress does not act quickly, Bush said the consequences could play out in “a distressing scenario,” including potential bank failures, job losses and inability for ordinary Americans to borrow money to buy cars or send their children to college.
“Fellow citizens, we must not let this happen,” he said.
The televised address, and the extraordinary offer to bring together Sen. Barack Obama, the Democratic presidential nominee, and Sen. John McCain, the Republican, just weeks before the election underscored a growing urgency on the part of the administration that Congress must act to avert a far-reaching economic collapse.
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It was the first time in Bush's presidency that he delivered a prime-time address devoted exclusively to the economy, and it came at a time when deep public unease about shaky financial markets has been coupled with skepticism and anger directed at a government bailout that would be the costliest in American history.
The address capped a fast-moving and chaotic day in Washington, on the presidential campaign trail and on Wall Street.
On Capitol Hill, delicate negotiations between Treasury Secretary Henry Paulson Jr. and Democratic and Republican leaders on the bailout plan were complicated by resistance from rank-and-file lawmakers hearing complaints from constituents.
For the first time, the administration signaled it would be willing to make major concessions to secure congressional approval, including limits on pay of executives whose firms seek government assistance and a plan to give taxpayers an equity stake in some of the firms so that the government can profit if the companies prosper in the future.
On Wall Street, financial markets continued to struggle. The cost of borrowing for banks, businesses and consumers shot up and investors rushed to safe havens like Treasury bills – a reminder that credit markets, which had recovered somewhat after Paulson announced the broad outlines of the bailout plan last week, remain under severe stress, with many investors still skittish.
Congressional leaders and Treasury officials said they expected to work through the night Wednesday.
Sen. Chris Dodd, D-Conn. and chairman of the banking committee, said a deal could come together as early as today. Several lawmakers said they expected Congress to work through the weekend.
By early evening, after McCain said that “it has become clear that no consensus has developed to support the administration's proposal,” House leaders in both parties declared they were, in fact, moving forward.
“Working in a bipartisan manner, we have made progress,” the House speaker, Nancy Pelosi, and Rep. John Boehner, the Republican leader, said in a joint statement. “We agree that key changes should be made to the administration's proposal. It must include basic good-government principles, including rigorous and independent oversight, strong executive compensation standards and protections for taxpayers.”
Bush used his speech to signal that he was willing to address lawmakers' concerns, including fears that taxpayer dollars will be used to compensate Wall Street executives and that the plan would put too much authority in the hands of the Treasury secretary without sufficient oversight.
“Any rescue plan should also be designed to ensure that taxpayers are protected,” Bush said. “It should welcome the participation of financial institutions, large and small. It should make certain that failed executives do not receive a windfall from your tax dollars. It should establish a bipartisan board to oversee the plan's implementation. And it should be enacted as soon as possible.”
The speech came after the White House, under pressure from GOP lawmakers, opened an aggressive effort to portray the financial rescue package as crucial not just to stabilize Wall Street but to protect the livelihoods of all Americans.
But the White House gave careful thought to the timing; aides to Bush said they did not want to appear to have the president forcing a solution on Congress.
On Capitol Hill, Paulson, facing a second day of questioning by lawmakers, this time before the House Financial Services Committee, tried to focus as much on Main Street as Wall Street.
“Every business in America relies on money flowing through the financial system every day,” the Treasury secretary said.
In perhaps his most pointed pitch to the audiences around the country, Paulson said: “This entire proposal is about benefiting the American people because today's fragile financial system puts their economic well-being at risk.” Without action, he added: “Americans' personal savings and the ability of consumers and business to finance spending, investment and job creation are threatened.”