Democrats insist Republicans back finance rescue plan

September 27th, 2008 - 7:29 am ICT by IANS  

Barack ObamaWashington, Sep 27 (DPA) The US Congress wrestled Friday across political divides over a deeply unpopular giant financial industry rescue plan as majority Democrats insisted that Republicans get on board before putting it to a vote.The White House pulled out all the stops, sending its representatives to Capitol Hill where negotiations continued over the controversial $700-billion life raft for Wall Street.

President George W. Bush said Congress needs to pass the bill immediately to avoid a long and painful recession as the deepening crisis over bad mortgage debt drains capital markets of their credit lines.

Bush tried to calm nervous markets, saying he was optimistic and determined that an agreement will be reached.

” We will rise to the occasion. Republicans and Democrats will come together and pass a substantial rescue plan,” he said.

The financial crisis and ensuing political wrangling come less than six weeks before Nov 4 elections.

This week, they also threatened to derail the first campaign debate between Democrat Barack Obama, 47, and Republican John McCain, 72. But the Friday evening event was back on schedule again.

The nation faces “complete and total financial collapse” unless the measure passes “as quickly as possible,” so that trust is restored to the financial community to lend money, White House spokeswoman Dana Perino said.

She said credit markets “have shown troubling signs of tightening up even more in the past several days.”

Perino and Senate Majority Leader Harry Reid agreed the plan could pass by Monday morning, but House Republicans were dragging their feet.

Tempers flared as Reid charged that McCain had derailed a congressional agreement near to being clinched Thursday by suspending his campaign and rushing to Washington to get involved.

Democrats, who have held the majority in Congress for two years and appear to have enough votes to pass the plan, are in the difficult position of having to work with the deeply unpopular Republican president to find a way to stave off full-blown financial panic.

Democrats insist that a majority of Republicans in Congress get behind the bill, seeking the political cover of a bipartisan plan amid an increasingly angry public reaction to the idea that tax dollars will bail out the Wall Street firms whose messy investments caused the current crisis.

Republicans, having lost the congressional majority in 2006 due to Bush’s increasing unpopularity, are looking to elections on Nov 4 with an even more worried eye over the mammoth bailout.

The leader of Republicans in the House of Representatives, John Boehner, said his legislators believed that the country is “on the edge of an economic crisis” but wanted to make sure they did the “right thing for our country and protect our taxpayers.”

“We will not agree to a bill that sells taxpayers out to bail out Wall Street,” he said.

Republican Representative Roy Blunt, who is heading negotiations in the House, suggested that Democrats could pass the bill at “any moment if they want to.” To get support from House Republicans, however, the rescue plan needed to add “free-enterprise protections.” He did not give details.

The standoff reflects the deep ideological faults over what would be the largest government intervention in capital markets ever.

For Republicans, including Bush, the year-long government scramble to prop up financial firms and markets has gone against their deep belief in free markets.

The $700-billion plan, pitched by Bush in a moment of urgency just last week as things drastically deteriorated, would allow the government to buy up the toxic assets and sell them after the housing market restabilizes.

Democrats like Reid believe that Republicans have created the crisis in the first place by deregulating the finance and mortgage- lending industries.

Both parties are angry over the exorbitant compensation packages Wall Street has paid itself for ever more risky investment schemes that led to the crisis.

Democrats in both houses along with Senate Republicans have already wrested concessions from the White House and Treasury Secretary Henry Paulson to allow limits be placed on executive compensation in firms being helped, on partial government equity stakes in the companies and on a bipartisan oversight panel for the bailout.

Democrats are also insisting that added money be made available to keep people in their homes who are facing foreclosure.

“We can’t do it alone. We need House Republicans on board,” Reid said.

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