By JULIE HIRSCHFELD DAVIS and DAVID ESPO, Associated Press Writers
WASHINGTON – The Bush administration and Congress anxiously revived negotiations Friday on a $700 billion financial bailout, one day after the largest bank collapse in U.S. history provided a brutal reminder of the risks of failure.
“I’m convinced that by Sunday we will have an agreement that people can understand on this bill,” predicted Massachusetts Rep. Barney Frank, a key Democrat in eight days of up-and-down talks designed to stave off an economic crisis.
added that “progress is being made,” although neither she nor Frank divulged details at a late-afternoon news conference in the Capitol. Talks continued into the evening.
Frank and Pelosi spoke a few hours after President Bush prodded lawmakers to “rise to the occasion” — and quickly.
In one small sign of progress, House Republicans dispatched their second-ranking leader, Rep. Roy Blunt of Missouri, to join the talks after their objections to an emerging compromise had brought negotiations to a standstill the day before. They also demanded “serious consideration” for a plan of their own, involving less government intrusion and lower cost to the taxpayers than the $700 billion that has been seeking.
The legislation the administration is promoting would allow the government to buy bad mortgages and other sour assets held by investors, most of them financial companies. That should make those companies more inclined to lend and lift a major weight off the national economy that is already sputtering. But a significant number of lawmakers, including many House conservatives, say they’re against such heavy federal intervention.
Under their plan, the government would insure the distressed securities rather than buy them. Tax breaks would provide additional incentives to invest.
Democrats and Bush officials said the insurance proposal was acceptable as an option but not as a replacement for the administration’s more sweeping approach.
The crisis was hardly limited to the U.S.