Congressional lawmakers grew uneasy Tuesday about the Bush administration's plan to spend $700 billion rescuing the U.S. financial industry, demanding provisions that limit executive pay and assurance to taxpayers that they're not writing a blank check to bail out troubled firms.
Leaders of both parties were cautiously optimistic that they'd be able to pass a plan, perhaps by the end of this week, but they were struggling to iron out details. Republican conservatives objected to the size and scope of the package, while Democrats insisted on adding stronger government oversight and consumer protection. Changes were assured, but in the end the administration is likely to win approval of a massive bailout package.
“We've got to get this right. … There is no second act,” said Senate Banking Committee Chairman Christopher Dodd, D-Conn.
Senate Republican leader Mitch McConnell of Kentucky echoed that thought, adding, “We're anxious to act quickly.”
The rank and file were stirring, however. Republican conservatives protested that the bailout is little more than an expensive giveaway to big corporations as well as an irresponsible government intrusion into the private sector.
“This massive bailout is not the solution. It is financial socialism, and it is un-American,” Sen. Jim Bunning, R-Ky., said at a Senate Banking Committee hearing at which members of both parties spent five hours grilling top administration officials.
Democrats were concerned that CEOs and big companies stood to benefit at the expense of middle- and lower-class taxpayers.
“This proposal is stunning and unprecedented in its scope and lack of detail,” Dodd said. “It would allow the (Treasury) secretary to intervene in the economy by purchasing at least $700 billion of toxic assets. … It would do nothing to help even a single family save a home.”
Still, the point man for the package in the House of Representatives, Financial Services Committee Chairman Barney Frank, D-Mass., said he didn't think that the level of dissent on both sides of the aisle was enough to derail a major bailout package, and that “our primary focus at this point is still getting the thing nailed down with the Senate. I think we will be together on everything.
“Am I concerned about all the concerns? You know, this is legislation. There are some people who I think are trying to derail it, but there are a lot of people who honestly want to make this work.”
Treasury Secretary Henry Paulson, who appeared with Federal Reserve Board Chairman Ben Bernanke before Dodd's committee, tried to show empathy with the public.
“I share the outrage people have,” said Paulson, a former CEO of the huge investment firm Goldman Sachs. “It's embarrassing to look at this. I think it's embarrassing to the United States of America. There's a lot of blame to go around.”
In the House, Republican members met privately with Vice President Dick Cheney and White House Budget Director Jim Nussle in what was described as a tense session.
“People want to try to enjoy capitalism on the way up, socialism on the way down, and we know where that is headed,” said Rep. Jeb Hensarling, R-Texas. “What we will end up with, I believe, is less freedom, less opportunity for the next generation.”
Whether such anger will erupt into the kind of backbench rebellion that forced negotiators in the 1980s and 1990s to make changes in tax and budget deals remained unclear.
House Republican leader John Boehner of Ohio explained the reservations that many GOP members shared.
“It's the size of the solution that causes great concern, and trying to gauge the risk-to-reward ratio,” he said. “How serious is the problem, and how imminent is the crisis?”
Still, leaders of both parties in both chambers of Congress remained committed to moving ahead with some substantial financial-system rescue plan.
The House is expected to debate the plan first, perhaps as early as Thursday.