The nation's congressional and economic leaders say they are committed to quickly forging a bipartisan plan to stabilize the teetering U.S. finance industry and calm tremors felt all the way to Main Street, U.S.A.
After he and Federal Reserve Chairman Ben Bernanke briefed congressional leaders for approximately 90 minutes Thursday night, Treasury Secretary Henry Paulson said the plan likely would require legislation from Congress, which is led by Democrats.
The plan, which Congressional leaders hope to get today, would allow the federal government to buy up toxic assets, such as bad mortgages, held by troubled banks and other institutions.
Congressional leaders said they expected to act on the plan before taking a pre-election recess.
Paulson and Bernanke began their discussion in House Speaker Nancy Pelosi's office by focusing on a comprehensive approach to address the bad debts on bank balance sheets, an underlying source of the trouble with America's financial institutions and financial markets.
"The root cause of the stress in the capital markets is the real estate correction," Paulson said afterwards. "We're coming together to work for an expeditious solution, which is aimed right at the heart of this problem, which is illiquid assets on financial institutions' balance sheets."
The economic officials were exploring all options, legislative and administrative, and expect to work through the weekend with congressional leaders to find a solution they all can agree on.
"This crisis isn't about solving the problems with banks or people who hold commercial paper," House Minority Leader John Boehner, R-Ohio, said afterwards. "This is about saving our economy, saving American jobs, making sure that people's retirement security is as secure as they think it is and protecting people's savings."
Senate Majority Leader Harry Reid, D-Nev., suggested that he expected to see more details from the Bush team -- and quickly.
"Congressional leaders expressed our hope that the administration provide us the details of their proposal for addressing our economic crisis as soon as possible," he said in a written statement. "We all understand the stakes, we have all committed to working with the administration, and we are all anxious to see their proposal within a matter of hours, not days."
Pelosi: Insulate Main Street From the Crisis
Before the briefing began, Pelosi, D-Calif., flanked by Reid, Boehner, and other congressional leaders, suggested Democrats are eager to work in a bipartisan fashion -- as long as their concerns are addressed.
"Understanding that we have a financial crisis in our economy," said Pelosi, "we are here to work together for solutions that will solve that crisis in a way that insulates taxpayers, insulates Main Street from the crisis."
In a letter to President Bush earlier in the afternoon, Pelosi said she wanted to ensure a consistent approach to the "ongoing market turmoil" by developing a bipartisan recovery effort, and offered to postpone Congress' planned adjournment on Friday, Sept. 26, to address the ongoing financial crisis.
The Bush team has come to the conclusion that continuing to handle the financial crisis on a case-by-case basis -- as it has with plans to address the failures of AIG, Inc., Lehman Bros. and Bear Stearns -- will not work, a senior administration source said. Instead, White House officials are working on a larger, strategic solution, realizing they may not have much time to act.
Officials were expected to present a plan that would address broad concerns in the financial system through a systemic approach, a senior source told ABC News. It was expected to be a plan that would help to improve the balance sheets of U.S. financial institutions and relieve pressure in money market accounts.
The markets rallied early today, posting impressive gains, thanks to massive government intervention in the credit markets, early Thursday morning, of potentially $180 billion in additional funds.
But then, stocks started to fall slowly throughout the day as it appeared investors had second thoughts and began worrying again about the state of the financial sector.
That all turned around late in the afternoon on speculation that the Treasury Department was floating its plan to buy bad debt from banks and financial institutions, similar to how the Resolution Trust Corporation did during the savings and loan crisis in the late 1980s.
The Treasury Department had no comment, even after Paulson spent 45 minutes meeting with the president Thursday afternoon. Also in attendance were Bernanke, SEC Chairman Chris Cox and other members of the White House economic team.
Some Have Doubts
But not everybody seemed sold on a solution modeled on the Resolution Trust Corporation.
"The RTC model is not the best way to go and, in fact, might not work at all," said Sen. Chuck Schumer, D-N.Y., earlier in the day, calling the current situation, "the greatest financial crisis since the Great Depression."
Added conservative Rep. Jeb Hensarling, R-Texas, of an RTC-style plan: "There's a lot of lousy options out there. Right now, I would say that this is one of the lousiest."
Pelosi's letter before the Paulson-Bernanke briefing may signal that Democrats are prepared to accept the president's plan for Wall Street, but it also demanded a second stimulus package targeted at Main Street.
Pelosi said such a package must include five components -- "investment in infrastructure for economic growth and job creation here at home, home heating assistance at a time of record energy costs, extended unemployment insurance for the growing number of Americans looking for work, food stamps that will help ensure we feed hungry families in a time of crisis, and assistance to maintain critical health care coverage jeopardized by state budget cuts."
Pelosi said she wants to "balance accountability to the U.S. taxpayer with protecting American families from the crisis's fallout."
Obama, McCain Weigh In on Financial Crisis
Sen. Barack Obama, D-Ill., the Democratic presidential nominee, planned to meet with his own economic team Friday morning in Miami, and his campaign suggested he would discuss the White House team's proposals as well as his own ideas.
A written statement from his campaign emphasized that Obama was following events at the Capitol Hill meeting closely.
"Sen. Obama spoke via phone this afternoon with Treasury Secretary Henry Paulson, Federal Reserve Chairman Ben Bernacke, former Treasury Secretary Larry Summers, former Chairman of the Federal Reserve Paul Volcker and Mayor Michael Bloomberg about the state of the financial markets," the statement said. "These were individual phone calls."
Campaigning in Cedar Rapids, Iowa, hours before the Washington briefing, Republican presidential nominee Sen. John McCain, R-Ariz., said federal agencies regulating the financial industry have failed to do their jobs, and called for firing SEC's Cox and creating a new agency.
"I'm calling for the creation of the Mortgage and Financial Institutions Trust, the MFI," McCain said. "The priorities of this trust will be to work with the private sector and regulators to identify institutions that are weak and take remedies to strengthen them before they become insolvent."
Later, in Green Bay, Wis., McCain claimed Obama "just doesn't get it" when it comes to financial reform.
"A vote for me will guarantee that the forces that have brought down our economy will be out of business," McCain said. "I will end the corrupt practices on Wall Street and backroom deals in Washington D.C. I will hold accountable those responsible for the oversight and protection of consumers, taxpayers and homeowners."
During a speech in Espanola, N.M., today, Obama gave a short preview of his own economic pitch.
"Tomorrow, I will be convening a meeting with my top economic advisors to discuss a plan based on the ideas I've been talking about with former Fed Chairman Paul Volcker and other advisors of mine," Obama said. "Then I'll call for the passage of a homeowner and financial support act that would establish a more stable and permanent solution than the daily improvisations that have characterized policymaking over the last year."
Obama's campaign said that, besides Volcker and Summers, Obama's economic advisers who may attend the meeting include Dan Tarullo, Laura Tyson and Robert Rubin, with others participating by phone, including Warren Buffet, Paul O'Neil and Joe Stiglitz.
ABC News' Martha Raddatz, Jon Banner, Louise Schiavone, Dan Arnall, David Kerley, Sunlen Miller, Dean Norland and ABC News Radio contributed to this report.