By NEIL H. SIMON, Media General News Service
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WASHINGTON—A compromise plan to potentially spend $700 billion bailing out Wall Street of bad mortgage-backed assets includes an optional insurance program Rep. Eric I. Cantor, R-Va., and House Republicans sought.
“We want to be sure Wall Street pays to clean this up and taxpayers aren’t left with the short end of the stick,” he said.
Cantor’s plan called for having the government insure mortgage-backed securities to be sold back to the private sector, rather than be bought outright by the government as recommended by Treasury Secretary Henry M. Paulson Jr.
A compromise package including both plans was released around 5:30 p.m. Sunday by House Speaker Nancy Pelosi, D-Calif. It called for the insurance plan to be created but there is no requirement for any investors to use it.
Cantor said, “All this is optional for the investors.” But investors will buy the assets knowing the securities are guaranteed by the government, he said. “This insurance program will end up being very successful.”
But Pelosi was more skeptical, saying House Republicans would have to convince Paulson to push the plan and get investors to participate.
“This is their proposal,” she said. “This is their administration.”
Even some Democrats skeptical of the historic bailout proposal said the insurance provision would unlikely be used.
It’s like the Treasury Department demanded a Cadillac and “we gave them a Cadillac and forced them to take a 1988 Yugo,” said Rep. Brad Sherman, D-Calif. "They’ll never use the Yugo."
Cantor had hoped the bill would add incentives for companies to buy insurance for many of their less-risky assets. One idea was to allow higher executive pay for CEOs of firms that opt for the insurance. Under the compromise plan, CEOs would see their pay limited if they sell off their bad loans to the government.
Pelosi pledged House action on the bill Monday. With the House planning no legislative business for the Jewish New Year, Rosh Hashanah, which starts at sundown Monday, a vote on the bill was expected to occur before 12:30 p.m. to give Jewish members time to fly home for the holiday.
The Senate is not expected to take up the bill until mid-week.
All the back and forth has kept lawmakers in Washington longer than anticipated. Cantor spent Saturday working until close to midnight, he said.
Cantor was not in the highest-level meetings in House Speaker Nancy Pelosi’s office Saturday night.
“You can’t do that with too many chefs in the kitchen,” Cantor spokeswoman Rachel Taylor said.
But when the varying factions meeting in Pelosi’s suite broke into separate rooms for talks, Cantor was in the Republican huddle, he said.
Earlier Saturday he was busier. His schedule included a 10 a.m. Republican working group meeting, an 11:30 a.m. Republican leadership meeting.
Between noon and three he spoke to White House Chief of Staff Josh Bolton, Senior Counselor Ed Gillespie and former House Speaker Newt Gingrich.
From two to four Saturday afternoon he received calls from Republican presidential candidate John McCain, and Sens. John Kyl, R-Ariz., John Thune, R-S.D., and Bob Corker, R-Tenn.
Despite numerous calls with colleagues, Republicans did not seem fully supportive of the new proposal.
“I really do think half the caucus is undecided,” said Rep. Joe Barton, R-Texas.
House Republican leader John Boehner, R-Ohio, called on all members “whose conscience will allow them” to support the plan, a signal the GOP is not going to be tough on members who object to such a historic government bailout just 40 days before facing reelection.
At one point Sunday, groups of rank-and-file Democrats and Republicans sat in separate basement rooms in the Capitol hearing alternately from the same economic experts who warned the bailout plan as originally drafted may not solve the overall economic crisis.
“Many of us are very concerned about spending $700 billion and being wrong,” said Rep. Randy Forbes, R-Va. “If it takes another 24 hours or 48 hours, I think it’d be better to do that than do something that we step back and say, ‘Oh my gosh, that didn’t do what we wanted it to do.’”
Across the hall, Rep. Robert C. Scott, D-Va., sat in a briefing with about 30 members of a newly-formed Democratic Skeptics Caucus. Leaders of the group said Sunday they remain opposed to the bill, warning the whole process is moving with unnecessary speed due to administration warnings of dire economic consequences if Congress delays action.
Referring to the left-leaning members across the hall, a Republican staffer standing between the two meeting rooms joked, “It’s a scary day when our guys are agreeing with (Rep.) Dennis Kucinich.”
If the deal stands as drafted Sunday, Kucinich, D-Ohio, said, “I’m not just going to vote “no,” I’m going to vote “hell, no.”
(Reporter Neil H. Simon can be reached at nsimon@mediageneral.com)
“We want to be sure Wall Street pays to clean this up and taxpayers aren’t left with the short end of the stick,” he said.
Cantor’s plan called for having the government insure mortgage-backed securities to be sold back to the private sector, rather than be bought outright by the government as recommended by Treasury Secretary Henry M. Paulson Jr.
A compromise package including both plans was released around 5:30 p.m. Sunday by House Speaker Nancy Pelosi, D-Calif. It called for the insurance plan to be created but there is no requirement for any investors to use it.
Cantor said, “All this is optional for the investors.” But investors will buy the assets knowing the securities are guaranteed by the government, he said. “This insurance program will end up being very successful.”
But Pelosi was more skeptical, saying House Republicans would have to convince Paulson to push the plan and get investors to participate.
“This is their proposal,” she said. “This is their administration.”
Even some Democrats skeptical of the historic bailout proposal said the insurance provision would unlikely be used.
It’s like the Treasury Department demanded a Cadillac and “we gave them a Cadillac and forced them to take a 1988 Yugo,” said Rep. Brad Sherman, D-Calif. "They’ll never use the Yugo."
Cantor had hoped the bill would add incentives for companies to buy insurance for many of their less-risky assets. One idea was to allow higher executive pay for CEOs of firms that opt for the insurance. Under the compromise plan, CEOs would see their pay limited if they sell off their bad loans to the government.
Pelosi pledged House action on the bill Monday. With the House planning no legislative business for the Jewish New Year, Rosh Hashanah, which starts at sundown Monday, a vote on the bill was expected to occur before 12:30 p.m. to give Jewish members time to fly home for the holiday.
The Senate is not expected to take up the bill until mid-week.
All the back and forth has kept lawmakers in Washington longer than anticipated. Cantor spent Saturday working until close to midnight, he said.
Cantor was not in the highest-level meetings in House Speaker Nancy Pelosi’s office Saturday night.
“You can’t do that with too many chefs in the kitchen,” Cantor spokeswoman Rachel Taylor said.
But when the varying factions meeting in Pelosi’s suite broke into separate rooms for talks, Cantor was in the Republican huddle, he said.
Earlier Saturday he was busier. His schedule included a 10 a.m. Republican working group meeting, an 11:30 a.m. Republican leadership meeting.
Between noon and three he spoke to White House Chief of Staff Josh Bolton, Senior Counselor Ed Gillespie and former House Speaker Newt Gingrich.
From two to four Saturday afternoon he received calls from Republican presidential candidate John McCain, and Sens. John Kyl, R-Ariz., John Thune, R-S.D., and Bob Corker, R-Tenn.
Despite numerous calls with colleagues, Republicans did not seem fully supportive of the new proposal.
“I really do think half the caucus is undecided,” said Rep. Joe Barton, R-Texas.
House Republican leader John Boehner, R-Ohio, called on all members “whose conscience will allow them” to support the plan, a signal the GOP is not going to be tough on members who object to such a historic government bailout just 40 days before facing reelection.
At one point Sunday, groups of rank-and-file Democrats and Republicans sat in separate basement rooms in the Capitol hearing alternately from the same economic experts who warned the bailout plan as originally drafted may not solve the overall economic crisis.
“Many of us are very concerned about spending $700 billion and being wrong,” said Rep. Randy Forbes, R-Va. “If it takes another 24 hours or 48 hours, I think it’d be better to do that than do something that we step back and say, ‘Oh my gosh, that didn’t do what we wanted it to do.’”
Across the hall, Rep. Robert C. Scott, D-Va., sat in a briefing with about 30 members of a newly-formed Democratic Skeptics Caucus. Leaders of the group said Sunday they remain opposed to the bill, warning the whole process is moving with unnecessary speed due to administration warnings of dire economic consequences if Congress delays action.
Referring to the left-leaning members across the hall, a Republican staffer standing between the two meeting rooms joked, “It’s a scary day when our guys are agreeing with (Rep.) Dennis Kucinich.”
If the deal stands as drafted Sunday, Kucinich, D-Ohio, said, “I’m not just going to vote “no,” I’m going to vote “hell, no.”
(Reporter Neil H. Simon can be reached at nsimon@mediageneral.com)