WASHINGTON — Urgent efforts to lash together a $700 billion rescue plan for the national economy appeared to be stalling Thursday night, hours after key lawmakers had declared they had reached a deal.
Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke sped to Capitol Hill to try to revive or rework the proposal that President Bush said must be quickly approved by Congress to stave off economic disaster.
Congressional leaders were to meet with the economic chiefs into the night.
After six days of intensive talks on the unprecedented package proposed by the Bush administration, with Wall Street tottering and presidential politics intruding six weeks before the election, there was more confusion than clarity.
The day's earlier apparent breakthrough, announced with fanfare at midday, was followed by a White House summit bringing together President Bush, presidential contenders John McCain and Barack Obama, and top congressional leaders. But that meeting, aimed at showing unity in resolving a national financial crisis, broke up with conflicts in plain view.
Inside the session, House Republican leader John Boehner expressed misgivings about the emerging plan and McCain would not commit to supporting it, said people from both parties who were briefed on the exchange. They spoke on condition of anonymity because the session was private.
The earlier agreement by key members of Congress from both parties — but not top leaders — would have given the Bush administration just a fraction of the money it wanted up front, subjecting half the $700 billion total to a congressional veto.
But conservatives were still in revolt, balking at the astonishing price tag of the proposal and the hand of government that it would place on private markets.
Sen. Richard Shelby of Alabama, the top Republican on the Senate Banking Committee, emerged from the White House meeting to say the announced agreement "is obviously no agreement."
One group of House GOP lawmakers circulated an alternative that would put much less focus on a government takeover of failing institutions' sour assets. This proposal would have the government provide insurance to companies that agree to hold frozen assets, rather than have the U.S. purchase the assets.
Rep Eric Cantor, R-Va., said the idea would be to remove the burden of the bailout from taxpayers and place it, over time, on Wall Street instead. The price tag of the administration's plan to bail out tottering financial institutions and the federal intrusion into private business matters have been major sticking points for many Republican lawmakers.
There is wide agreement the U.S. economy is in peril, with financial institutions going under or near the edge and recession looming along with the resulting layoffs and increased home foreclosures.
There had been hopes for broad agreement, too, on a prescription by now, with a confident White House announcement by the president, McCain, Obama and congressional leaders.
But the best Senate Republican leader Mitch McConnell would say afterward was, "It's clear that more progress is needed and we must continue to work together quickly to protect our economy."
Democrat Obama and Republican McCain, who have both sought to distance themselves from the unpopular Bush, sat down with the president at the White House for an hourlong afternoon session that was striking in this brutally partisan season — but also, according to one participant, "a full-throated discussion." By also including Congress' Democratic and Republican leaders, the meeting gathered nearly all Washington's political power structure at one long table in a small West Wing room.
"All of us around the table ... know we've got to get something done as quickly as possible," Bush told reporters, brought in for only the start of the meeting. Obama and McCain were at distant ends of the oval table, not even in each other's sight lines. Bush, playing host in the middle, was flanked by Congress' two Democratic leaders, House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid.
McCain and Obama later said they both still expected an agreement could be reached.
Under the accord announced hours earlier among key lawmakers, the Treasury secretary would get $250 billion immediately and could have an additional $100 billion if he certified it was needed, an approach designed to give lawmakers a stronger hand in controlling the unprecedented rescue. The government would take equity in companies helped by the bailout and put rules in place to limit excessive compensation of their executives, according to a draft of the outline obtained by The Associated Press.
As negotiations continued Thursday night, Michele Davis, the chief Treasury spokeswoman said, "There are still open issues to be resolved, and we are committed to resolving them."
The plan's centerpiece still is for the government to buy the toxic, mortgage-based assets of shaky financial institutions in a bid to keep them from going under and setting off a cascade of ruinous events, including wiped-out retirement savings, rising home foreclosures, closed businesses and lost jobs.
Layered over the White House meeting was a complicated web of potential political benefits and consequences for both Obama and McCain.
McCain hoped voters would believe that he rose above politics to wade into successful, nitty-gritty dealmaking at a time of urgent crisis, but he risked being seen instead as either overly impulsive or politically craven, or both. Obama saw a chance to appear presidential and fit for duty but was also caught off guard strategically by McCain's surprising gamble in saying he was suspending his campaigning and asking to delay Friday night's debate to focus on the crisis.
Associated Press writers Deb Riechmann, Martin Crutsinger, Christopher Wills and Beth Fouhy in Washington and researcher Judy Ausuebel in New York contributed to this story.