Financial bailout bill set for House debate Monday

WASHINGTON -- A $700 billion financial bailout bill, drawn up after marathon weekend negotiations on Capitol Hill, will be voted on Monday by the House and possibly the Senate, key Congressional negotiators said Sunday.

"We've got to get this done," said Sen. Judd Gregg, of New Hampshire, the chief Senate Republican in the talks. "Getting this done promptly is absolutely critical to the confidence of the markets."

He also said he was confident that it would pass both houses of Congress.

"If we don't pass it we shouldn't be a Congress," he said. "The option of not passing it is not acceptable relative to our responsibility to the American people."

"Definitely," Rep. Barney Frank, Democratic chairman of the House Financial Services Committee, said when asked by Reuters whether the financial industry rescue package will hit the House floor on Monday.

A tentative agreement on the plan was announced shortly after midnight by House Speaker Nancy Pelosi, D-Calif., Senate Majority Leader Harry Reid, D-Nev., Treasury Secretary Henry Paulson and House Republican Whip Ray Blunt, R-Mo.

The lawmakers, eager to get a deal in place before financial markets open Monday, had emphasized in announcing their agreement that it still had to be translated into legislative language and presented to lawmakers for sign-off.

"We've been working very hard on this and we've made great progress toward a deal which will work and will be effective in the marketplace and effective for all Americans," Paulson said. "We've still got a lot to do to finalize it, but I think we're there."

The two presidential candidates, Sen. John McCain and Sen. Barack Obama, indicated they would likely support the final draft.

The plan would allow the Treasury Department to buy troubled mortgage-backed securities and other devalued loans held by financial institutions. The government could later resell the assets, presumably after they'd recovered much of their value.

Obama said Sunday that bailing out financial companies is necessary to keep the economy from crumbling further and taking more American workers down with it.

"My inclination is to support it because I think Main Street is now at stake," the Democratic senator said on CBS' Face the Nation.

McCain likewise said he expects to support the rescue deal as presented early Sunday.

"This is something all of us will swallow hard and go forward with," McCain said on ABC'sThis Week. "The option of doing nothing is simply not an acceptable option."

The proposal is designed to restore market confidence, set a floor under asset prices and allow bank capital and credit to flow again, unlocking critical gears of lending for the economy.

The compromise plan will keep the basic Treasury Department framework. But the Bush administration would get only the first $250 billion of the money up front; then the president could request another $100 billion. The final $350 billion could be cleared by a further act of Congress.

The deal would include limits on compensation to executives whose firms benefit from government assistance, which Sen. Kent Conrad, D-N.D., said was one of the thorniest issues lawmakers and the administration faced during their hours-long negotiating session.

Conrad said lawmakers wanted to prevent golden parachutes — big severance packages to executives who crash their company, then sail off into the sunset. But the question during talks was "How do you actually implement that," Conrad said.

The legislation would place "reasonable" limits on severance for executives of companies that benefit from the rescue plan, said a senior administration official who was authorized to speak only on background. It would affect fired executives of financial firms, and executives of firms that go bankrupt. Some of the provisions would be retroactive and some prospective, the official said.

To ensure taxpayers share in any profits from the program, the deal will let the government take an equity share in the firms it assists. The plan also includes oversight boards and regular reporting by Treasury .

The government would also use its increased presence in the mortgage market to try to restructure troubled mortgages and help homeowners facing foreclosure.

A group of conservative House Republicans had been pushing negotiators to include their alternative plan to have the govenrment insure mortgage assets, rather than buying them outright.

The insurance provision was added as an alternative to having the government buy distressed securities. House Republicans say it will require less taxpayer spending for the bailout.

But the Treasury Department has said the insurance provision would not pump enough money into the financial sector to make enough credit available. The department would decide how to structure the insurance provisions, said Conrad.

"Democrats could say (in every bill that comes up ) 'everything the Republicans want to do, we'll do as an option,' " said Rep. Jeb Hensarling, R-Tex, before the final deal was announced. "Is it reality or is it window dressing?"

President Bush Saturday stepped up efforts to get a deal, and to convince the public of the urgency — and necessity — of the effort.

"If it were possible to let every irresponsible firm on Wall Street fail without affecting your family, I would do it," Bush said in his weekly radio address. "But that is not possible. The failure of the financial system would mean financial hardship for many of you."