Midnight deal brokered on bailout

Lawmakers said they reached a tentative agreement on a $700 billion plan to revive the credit markets by authorizing the government to buy troubled assets from financial institutions.

“We've made great progress,” House Speaker Nancy Pelosi told reporters early today after a day of negotiations at the Capitol over the administration's bailout proposal. “We have to commit it to paper so we can formally agree.”

The House could vote on it today and the Senate on Monday.

“We've made great progress toward a deal which will work and be effective” in the marketplace, Treasury Secretary Henry Paulson said. More work needs to be done to finalize it, “but I think we're there.”

Senator Kent Conrad, the North Dakota Democrat who chairs the budget committee said $250 billion would be immediately available and another $100 billion could be used when requested by the president for debt purchases. Congress could bar the expenditure of the remaining $350 billion only by passing a resolution to block it from being spent.

Senate Majority Leader Harry Reid said an announcement would come tomorrow after details are worked out. “This evening has been extremely difficult,” he said. The lawmakers provided no details of this morning's accord.

Paulson's plan would authorize the Treasury to begin purchasing distressed debt securities from financial companies affected by the record number of home foreclosures.

Reid said earlier today that he wanted an agreement to reassure investors before Asian financial markets open late tomorrow.

Paulson and Federal Reserve Chairman Ben Bernanke said the rescue plan was necessary to revive lending and restore the flow of credit to the U.S. economy. President George W. Bush warned today that legislative action was necessary to avoid a “deep and painful recession.”

House Financial Services Chairman Barney Frank said this morning's compromise plan includes “genuine compromise.”

McCain phones leaders

Republican John McCain placed phone calls to President Bush and Republican congressional leaders Saturday to discuss the bailout of failed financial institutions. McCain flew to Washington from Mississippi to resume work on the bailout, arriving shortly before dawn.

After making a dramatic entrance Thursday on Capitol Hill to be part of the bailout negotiations, McCain stayed away Saturday as lawmakers inched toward an agreement. He made phone calls to the White House and GOP leaders from his suburban condominium and later at campaign headquarters.

Aides said that in addition to Bush, McCain spoke with Paulson, Bernanke, and about a dozen influential Republicans, including Senate Minority Leader Mitch McConnell and Rep. Eric Cantor.

McCain also spoke to New Mexico Rep. Heather Wilson, saying “I know this is a tough struggle today on this package.” He told her it was imperative to reach a deal before markets open Monday.