After the White House meeting, Frank told Democratic colleagues that McCain's sudden heightened involvement in the negotiations -- he announced Wednesday he was suspending his campaign and might skip a scheduled presidential debate with the Illinois senator Friday -- has destroyed the chance of an agreement, sources told ABC's George Stephanopoulos.
Frank compared McCain's involvement to "Richard Nixon blowing up the Vietnam peace talks in 1968."
A senior McCain adviser told ABC News' David Chalian, "It is clear that there is not yet an agreement, but we're working with all parties with the common goal of getting an agreement. When we have an agreement, we'll have a debate."
Other Democrats pointed fingers at House Republicans, who they said were reneging on matters they thought had been settled, such as on the issue of helping homeowners with foreclosures.
House Republicans said Democrats never included them in negotiations and were trying to jam the agreement's "principles" down their throats. And many are concerned about the U.S. government purchasing apparently toxic assets.
Paulson feared the deal was falling apart, sources told Stephanopoulos.
As Democrats met in the White House's Roosevelt Room after the meeting with Bush, Paulson told them, "Please don't blow this up," according to sources.
Sources say Frank was livid, saying, "Don't say that to us after all we've been through!"
House Speaker Nancy Pelosi, D-Calif., reportedly said, "We're not the ones trying to blow this up. It's the House Republicans."
Paulson replied, "I know, I know; it's both sides," according to a Treasury Department spokeswoman.
After the limited participation by House Republicans at the evening Capitol Hill session, Frank said Pelosi won't bring a bill to the House floor unless it has some backing from Republicans in the House.
"Ms. Pelosi will not bring a partisan bill to the floor," said Frank. "She will not say that we're going to have a one-sided Democratic bill that is attacked by the House Republicans in response to a request from George Bush. That's not good for the country."
Dodd and Frank dismissed a late offer by House Republicans that the proposed bailout of financial firms with taxpayer money by purchasing toxic mortgage-backed assets be replaced with a taxpayer-backed insurance program.
Frank said it wouldn't work, and said Paulson didn't believe it would work either.
"Sen. McCain and the president between them ought to get House Republicans to come to the table," said Frank, who disputed a McCain campaign report that the meeting Thursday had devolved into a shouting match.
"No," said Frank. "Some of us were frustrated."
"If he feels that strongly about this, he ought to get on the phone and get the House Republicans to show up," said Dodd of President Bush, who gave a speech to the nation Wednesday night warning of the dangers of inaction.
"When House Republicans don't participate," Dodd said, "the question I'm clearly going to get from my Senate Democrats is: Why are we at the table talking when the president's party represented by the other party refuses to even show up? What are we doing here?"
Meanwhile, a group of House Republicans outlined their own proposal to address the financial crisis. They described it as a mortgage insurance approach, claiming it would make Wall Street pay for its own bailout.