Bush yields on exec pay
By Julie Hirschfeld Davis and David Espo, Associated Press
Thursday, September 25, 2008
President Bush summoned Barack Obama, John McCain and
legislative leaders to an extraordinary White House summit,
warning Americans and Congress on Wednesday night that failing
to act on a $700 billion financial-industry bailout could lead
to "a long and painful recession."
Earlier, Bush bowed to demands to limit the pay of executives
whose tottering companies would be rescued.
Democrats and Republicans were nearing agreement on the rescue
legislation, the most sweeping government intervention in the
market since the Great Depression, and set a meeting early today
to draft a bipartisan bill.
Bush acknowledged in a prime-time television address Wednesday
that the bailout would be a "tough vote" for lawmakers.
The administration appeared to be softening its resistance to
Democrats' demand that the eye-popping cost be phased in rather
than dispensed all at once.
But the president urged Congress to act quickly to pass the
plan, warning Americans in his 12-minute speech that failing to
act fast risked dire economic consequences such as disappearing
retirement savings, rising foreclosures, lost jobs and closed
"Without immediate action by Congress, America could slip into a financial
panic, and a distressing scenario would unfold," Bush said as he
worked to resurrect the unpopular bailout package.
Seeking to explain himself to conservatives, Bush stressed that
he was reluctant to put taxpayer money on the line to help
businesses that had made bad decisions and that the rescue is
not aimed at saving individual companies.
"With the situation becoming more precarious by the day, I faced
a choice: to step in with dramatic government action or to stand
back and allow the irresponsible actions by some to undermine
the financial security of all," Bush said. "These are not normal
With the administration's original proposal considered dead in
Congress, top House leaders issued an upbeat statement late
Wednesday saying there was progress toward revised legislation
that could pass.
"We are committed to continuing to work cooperatively and on a
bipartisan basis to safeguard the interests of the American
taxpayers," said Speaker Nancy Pelosi, D-Calif., and House
Republican leader John Boehner of Ohio.
Sen. Dick Durbin of
Illinois, the Senate's No. 2 Democrat,
expressed optimism that Congress could work through the weekend
and pass the measure, possibly by the time markets open Monday.
The heart of the unprecedented plan, unveiled less than a week
ago, involves the government buying up sour assets of shaky
financial firms in a bid to keep them from going under and to
stave off a potentially severe recession.
Treasury Secretary Henry Paulson and Federal Reserve Chairman
Ben Bernanke spent most of the day at the Capitol, shuttling
between public hearings on the proposal and private meetings
Presidential politics intruded, as well, when McCain said he
intended to return to
and called on Bush to convene crisis meetings until an agreement
was reached on legislation.
In their statement, Pelosi and Boehner said: "We agree that key
changes should be made to the administration's initial proposal.
It must include basic good-government principles, including
rigorous and independent oversight, strong
executive-compensation standards and protections for taxpayers."
Earlier, Paulson agreed to demands from critics in both parties
to limit the pay packages of Wall Street executives whose
companies would benefit from the proposed bailout.
"The American people are angry about executive compensation and
rightfully so," Paulson told the House Financial Services
Committee. "We must find a way to address this in the
legislation without undermining the effectiveness of the
The administration and congressional negotiators also were
nearing accord on parceling out the $700 billion so it would not
be available all at once, although key details remained to be
"Ultimately, $700 billion has to be available but . . . they are
making progress about how to give people some assurance that it
is not going to go to $700 billion in one fell swoop," said Rep.
Barney Frank, D-Mass., who was leading negotiations with Paulson
on the plan.
Paulson also was said to have accepted the idea of allowing the
government to take an equity stake in some of the companies
aided — rather than just purchasing their bad assets, as Bush
originally proposed — but there was no agreement yet on how the
plan would work.
Given the progress on the talks, Frank said the White House
summit would be relegated to little more than a publicity event.
"We're going to have to interrupt a negotiating session tomorrow
between the Democrats and Republicans on a bill where I think we
are getting pretty close and troop down to the White House for
their photo op," Frank said.
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