Inside the White House: What Went Wrong?

If all had gone according to plan, Thursday's White House meeting would have been a triumphant photo opportunity, where top Democratic and Republican congressional leaders come together with the president and the two presidential candidates to support a plan for stabilizing the financial markets. Instead, the meeting devolved into a shouting match that nearly derailed the economic bailout plan.

Here's an account of what happened, based on conversations with several of those present, both Democrats and Republicans:

The first sign of trouble: Twenty minutes before the White House meeting, Treasury Secretary Henry "Hank" Paulson calls House Speaker Nancy Pelosi to say there are problems with the agreement reached earlier in the afternoon. Pelosi is miffed. Democrats believed the issues Paulson raised had already been resolved.

President Bush opens the meeting at 4 p.m., quickly turning it over to Paulson who gives a status report on the markets and says, "We need to get this done quickly." Paulson turns it over to Pelosi, who defers to Senate Democratic Leader Harry Reid, who defers to Sen. Barack Obama. Obama starts things off for the Democrats by reiterating his principles on what the plan should include. Obama agrees with Paulson on the need to act quickly but says some on the Hill "don't understand the need for the rush." Some of the Republicans took this as an attack on them.

Obama then defers to Sen. John McCain, but McCain defers to House Republican Leader John Boehner to speak on behalf of the Republicans. Boehner says House Republicans have "a lot of problems" with the plan and "most of my caucus is not there."

At this point, the meeting is still fairly cordial. Pelosi even compliments the president on his speech Wednesday night. But the meeting starts to devolve.

After some more give and ake, Sen. Richard Shelby, the top Republican on the Senate Banking Committee, presents a five-page list of 192 economists and business school professors who oppose the plan. Bush isn't impressed. "I don't care what somebody on some college campus says," Bush says. Instead, he says he trusts Hank Paulson, who, he says, has more than 35 years of experience and access to more information than those academics on Shelby's list.

Boehner says House Republicans have a different idea: providing federal insurance for mortgage securities instead of buying them outright.

Obama chimes in again, asking Paulson what he thinks about the insurance idea. Paulson says he thinks the idea is unworkable, and adds, "We can't start over."

After 43 minutes, McCain finally speaks. He says there are "legitimate concerns that need to be listened to" and that there has been "significant progress" in incorporating his principles into the bill. "We have one shot at getting this done right," he says. McCain does not get specific. "He said a whole lot of nothing," says one Republican in the room.

Shortly after that, things get a whole lot worse. Rep. Spencer Baucus, the top Republican on the House Financial Services Committee, speaks in favor of the Republican alternative, setting Rep. Barney Frank, the Democratic chairman of the committee, into a rage. Frank accuses Republicans of "sandbagging" him by bringing up a plan he's never seen. There's more shouting. The president brings the meeting back to order and urges everybody to get back together because "we need to get this done." The deciding factor for him on any final deal, he says, is whether or not Hank Paulson says it will work.

The meeting ends, but the fireworks are yet to come.

Democrats go back into the Roosevelt Room to discuss whether to go out to the cameras waiting on the White House driveway. Paulson comes in and literally begs them not to go out and criticize the meeting. For dramatic effect, Paulson gets down on one knee and says, "Please, I beg you, don't blow this up."

Barney Frank, shouting, "Don't give me that bulls**t."

More Frank: "Hank, you've got a problem here. Republicans want to torpedo this."

Pelosi is also outraged, but the Democrats decide not to go out as a group to the microphones.