Bipartisan efforts to agree on a solution to the U.S. financial sector crisis appeared stalled Thursday night, just hours after members of Congress said they had reached a deal on a $700-billion US rescue plan.
U.S. President George W. Bush met with presidential contenders John McCain and Barack Obama, as well as Democratic and Republican leaders from the U.S. House of Representatives and the Senate, Thursday afternoon at the White House to discuss the beleaguered sector's meltdown.
After the meeting, officials said participants were heading back to Capitol Hill to continue working on a deal.
Senator Richard Shelby, the ranking Republican member of the Senate banking committee, emerged to say, "I can tell you I don't believe we have an agreement."
The impasse sent Congressional negotiators back to the drawing board Thursday night. They were joined during evening meetings by Treasury Secretary Henry Paulson in an effort to revive or rework the proposal. The meetings were expected to continue through the night.
McCain, who cut short his election campaigning Wednesday to head back to Washington, said after the White House meeting that progress was being made toward reaching a deal.
During interviews with U.S. networks, the Republican presidential candidate acknowledged that American taxpayers have "legitimate concerns" about the plan's $700-billion US price tag but are also well aware of the havoc the crisis could wreak.
Obama, McCain's Democratic rival, said Congress needs to do more work to reach an agreeable deal.
He refrained from blaming McCain for the stall, as other Democrats have done, telling CNN that now isn't the time to "start injecting presidential politics into delicate negotiations."
House Republican leader John Boehner reportedly expressed misgivings about the emerging plan during the White House meeting, while McCain would not commit to supporting it, according to members of both parties who were briefed on the meetings. They spoke on condition of anonymity.
Earlier in the day, key members of Congress said a deal had been struck but that the details were not final.
The tentative accord would give the Bush administration just a fraction of the $700 billion it had requested up front, with half that total subject to a Congressional veto, Capitol Hill aides said following private talks.
The agreement must still be passed by Congress and go to Treasury Secretary Henry Paulson and the White House to secure their approval.
But a plan to revive the U.S. economy, which was once in doubt, now looks more certain than ever, members of Congress said.
"I now expect that we will indeed have a plan that can pass the House, pass the Senate [and] be signed by the president," said Robert Bennett, a Republican senator from Utah.
The words were the same from the Democratic side of the Senate.
Chris Dodd, Democratic senator from Connecticut and a key architect of the agreement, said the proposed rescue plan should get support on both Wall Street and Main Street.
"We've reached a fundamental agreement on a set of principles, one for taxpayers, which is tremendously important," Dodd said.
For its part, the White House said it wants a deal in place as quickly as possible.
The drama began earlier in September when Washington proposed a bailout package that would get worthless asset-backed commercial debt off the books of faltering American financial institutions, but at a huge cost in taxpayer dollars.
The Bush administration made the proposal in a bid to stop investor panic in the wake of the bankruptcy of Lehman Brothers and the takeovers of Merrill Lynch & Co. and American International Group in the same week.
The government also stepped in to aid Bear Stearns last March and Fannie Mae and Freddie Mac earlier this month.
But ordinary Americans, faced with soaring home mortgage defaults and diminishing economic prospects, complained loudly about Washington's interest in helping Wall Street so generously.
Add in the fact that all 435 seats in the House of Representatives and 35 Senate seats are up for grabs in November's election and the administration's proposal appeared to be in political trouble.
The latest poll, conducted for Marist College in New York State and released Thursday, indicated that 68 per cent of respondents believed Congress should wait rather than rush a bailout package into law.
In response, Congress is rumoured to be placing strict limits on executive compensation from those firms that are being taken over or bailed out by the government.
Still, Wall Street reacted favourably to the announcement as rumours of the supposed deal for a bailout package in Congress hit markets.
The Dow Jones industrial index was up 286 points at 1:45 p.m. ET.
Investors even shrugged off the news that General Electric said its profits would drop in the third quarter, below its initial estimates.
By the close of trading, stocks had slid back marginally.
When the final bell ending trading rang, however, the Dow Jones index was up 196.89 points, to 11,022.06, a gain of 1.82 per cent on the day.