Congress balks at $700B bailout plan, wants changes

ByABC News
September 22, 2008, 10:18 PM

WASHINGTON -- The White House push for rapid congressional approval of a historic $700 billion taxpayer rescue of the financial sector ran into political turbulence Monday, with both conservatives and liberals balking at its price and scope.

Congressional leaders of both parties underscored the importance of responding to extreme stress in credit markets but said they couldn't swallow the plan as proposed. House Financial Services Committee Chairman Barney Frank, D-Mass., said Democrats and the Bush administration are moving toward agreement on some of lawmakers' chief concerns, such as oversight and more help for homeowners with troubled mortgages. Talks are continuing over other changes, such as limiting special pay of executives whose firms benefit from federal aid and letting bankruptcy judges alter mortgage terms.

Rank-and-file lawmakers, returning from weekend meetings with angry, anxious voters, said the plan gave Treasury Secretary Henry Paulson too much power, might not stanch financial bleeding and would stick average Americans with the bill for years of Wall Street excess.

"We're now seeing eight years of reckless Bush economic policies come crashing down with unimaginable speed and severity," said Senate Majority Leader Harry Reid, D-Nev.

Reid said Congress must pass a second bill to help workers by extending unemployment aid and investing in public works projects.

Senate Banking Chairman Chris Dodd, D-Conn., proposed an alternative plan that though more limited in several aspects would give the government the authority it wants to buy bad assets other than mortgage securities, such as those backed by credit card debt and car loans.

Sen. Richard Shelby, R-Ala., top Republican on the Senate Banking Committee, called the Treasury plan neither "workable nor comprehensive, despite its enormous price tag," adding it would be "foolish" to waste taxpayer dollars on a plan that could simply mean more ad hoc bailouts. He said Congress must work on an alternative.