Congress Pushes for Oversight in Historic Wall Street Bailout

Sept. 22, 2008— -- Congress and the White House may be closer to agreeing on a $700 billion Wall Street bailout package.

In a briefing with reporters this afternoon, Rep. Barney Frank, D-Mass., the chairman of the House Financial Services Committee, said the Bush administration and Congress have worked through conflicts on a provision that would allow for the creation of an oversight board to review how the $700 billion would be spent.

Both Democrats and Republicans in Congress have been calling for the board.

Frank said the Bush administration was worried that the creation of the board would delay the implementation of the bailout. But, he said, after members of Congress assured the administration that the bailout could begin as soon as possible, and that the board could be created later, the administration's pushback on the oversight provision stopped.

Two serious sticking points remain -- whether bankruptcy judges can be given the power to renegotiate the mortgage payments for homeowners, and whether any of the $700 billion could be spent on executive compensation.

A top administration official told ABC News that President Bush was prepared to yield on the executive compensation issue, and could support legislation that would limit compensation.

"There are no lines in the sand on individual provisions. The only line in the sand is on getting greedy on this proposal," one top Republican told ABC News' George Stephanopoulos.

Republicans realize this is not the most popular ground to stand on and that there is a "moral and political hazard" if executives at firms getting government help are making huge profits.

That sentiment stands in constrast to a statement earlier in the day from deputy White House spokesman Tony Fratto, who urged Congress to not insist on a cap for executive compensation.

"We certainly understand and are sympathetic to the sentiment regarding the pay of CEOs and senior management of these firms, but we have to focus on the problem, and the problem is that we need these firms to participate in the program and sell us this debt. Having punitive measures would provide a disincentive for firms to participate, and that would make the program much less likely to succeed," Fratto said.

Both houses of Congress have drafted bills that would require an oversight board and assurances that no taxpayers' money would be used to finance golden parachutes for executives whose companies were at the heart of the economic crisis.

The White House had originally pleaded Congress to quickly pass the bailout package without any changes.

Instead, both houses drafted bills that would require an oversight board and assurances that no taxpayers' money would be used to finance golden parachutes for executives whose companies were at the heart of the economic crisis.

The Senate proposal went even further than the House bill by including a measure that would give judges the power to rewrite mortgages that were in danger of default to lower monthly payments and avoid foreclosure.

Congress balked at giving Treasury Secretary Henry Paulson a blank check to buy up a mountain of virtually worthless mortgages that posed the biggest threat to the banking industry since the Great Depression.

Paulson insisted Sunday that it was only "a matter of days" before credit dried up completely and he argued against any changes to his proposal, including protection for homeowners or a cap on executive compensation.

Bush added his voice to the urgency of the legislation today and urged Congress to quickly pass the measure and to drop its plans for amendments, saying their demands would "undermine the effectiveness of the plan."

"Indeed, the whole world is watching to see if we can act quickly to shore up our markets," Bush said.