- SEPTEMBER 25, 2008, 2:48 P.M. ET
Agreement Reached on Bailout
Ahead of High-Level Meeting
Proposal Breaks $700 Billion Into Installments
WASHINGTON -- Top House and Senate Democratic and Republican lawmakers have reached a tentative agreement on a $700 billion plan to bail out U.S. financial markets, with some predicting the measure would pass both chambers of Congress.
After a three-hour meeting, lawmakers agreed to legislative principles that would approve Treasury's request for the funds, but would break it into installments, according to people familiar with the matter. Treasury would have access to $250 billion immediately, with another $100 billion to follow if needed. Congress would be able to block the last installment through a vote if it was unhappy with the program.
The agreement could require all companies participating in the program to agree to limits on executive pay—such as restrictions on "golden parachutes." It is also likely to give the government equity warrants in all participating companies.
Still unresolved is whether or not to include changes to bankruptcy law that would give judges the right to change the terms of mortgages. Democratic Sen. Dick Durbin of Illinois made a plea for it to be included, even though many lawmakers and the White House are hotly opposed.
Lawmakers and their staffs were hammering out precise language to take to a meeting with Treasury Secretary Henry Paulson late Thursday afternoon. Elements of the congressional plan will likely be opposed by Mr. Paulson. Treasury doesn't want conditions such as limits to executive pay to be broadly applied to all companies. Also, it was hoping to avoid having the funds doled out in pieces. Treasury may not have much room for maneuver, though, if it wants the bill to be completed quickly.
During the meeting, Democratic presidential candidate Barack Obama of Illinois called the cell phone of Sen. Chris Dodd of Connecticut, according to people familiar with the matter. Sen. Obama spoke with Sen. Dodd and Republican Sen. Robert Bennett of Utah.
Emerging from the meeting, Sen. Bob Corker (R., Tenn.) said: "I believe that we will pass this legislation before the markets open on Monday."
Senate Banking Chairman Dodd said negotiators plan to present their plan to rank-and-file members of their parties, as well as the Bush administration. He said lawmakers were prepared to "act expeditiously" to allow the federal government to buy billions of dollars in distressed assets from financial firms.
"We came to agreements on a lot of the important issues," House Financial Services Chairman Barney Frank (D., Mass.) said at the press conference following the meeting.
Messrs. Frank, Dodd and other key lawmakers were scheduled to meet with President Bush and the two U.S. presidential candidates late Thursday to discuss the bailout plan. The White House said earlier Thursday that "significant progress" had been made on the legislation, which many policymakers hope calm the tumult in the credit markets.
"We have made progress every day, and we are closer today to a conclusion than we were yesterday," said White House spokeswoman Dana Perino.
Mr. Frank, discussing the White House meeting, said lawmakers will be able to offer good news when they meet with the President.
"We will be able to go and tell them that there really isn't much of a deadlock to break, but I'm always glad to get to go to the White House," Mr. Frank said.
Noticeably absent at the Thursday morning meeting in the Capitol was Sen. Richard Shelby of Alabama, the ranking Republican on the Senate Banking Committee. Mr. Shelby has said he opposes the idea of bailing out Wall Street and was replaced in negotiations by Mr. Bennett, the number two GOP senator on the Banking panel.
online.wsj.com/article/SB122235295272975207.html#articleTabs%3Darticle
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