Congress, White House Reach Tentative Agreement on Bailout

Early this morning, lawmakers announced that they had agreed on a tentative plan to bailout financial firms. The Wall Street Journal reported an "exhausted" Treasury Secretary as saying, "I think we're there," during a press conference with House Speaker Nancy Pelosi, Senate Majority Leader Harry Reid, Senator Christopher Dodd, and House FInancial Services Chairman Barney Frank--all top Democrats. Pelosi said, "We've made great progress. We have to get it committed to paper so that we can formally agree."

Representative Roy Blunt (R-Ohio) was guarded, though optimistic, "I look forward to what we're going to see on paper and presenting these ideas to my colleagues and getting their reaction." Here are some details about the plan, via the NY Times:

The bill includes pay limits for some executives whose firms seek help, aides said. And it requires the government to use its new role as owner of distressed mortgage-backed securities to make more aggressive efforts to prevent home foreclosures.

In some cases, the government would receive an equity stake in companies that seek aid, allowing taxpayers to profit should the rescue plan work and the private firms flourish in the months and years ahead.

The White House also agreed to strict oversight of the program by a Congressional panel and conflict-of-interest rules for firms hired by the Treasury to help run the program.

The administration had initially requested virtually unfettered authority to operate the bailout program. But as they moved toward clinching a deal, both sides appeared to have given up a number of contentious proposals, including a change in the bankruptcy laws sought by some Democrats to give judges the authority to modify the terms of first mortgages.

House Republicans managed to get a provision for the Treasury Department "to create a federal insurance program that would guarantee banks and other firms against loss from any troubled asset," according to an official who spoke to the Washington Post.

Senator Judd Gregg (R-NH), who had approved the initial agreement that House Republicans blasted last week, said, "We worked out everything," but that Senate Republicans want to see to the bill. And Senator Bob Kerrey that voters "don't want a bailout of Wall Street and neither do we. What we are talking about is not losing 3 million jobs in a matter of weeks [and helping] small banks and small businesses literally keeping their doors open."

The Wall Street Journal has a fascinating article about how the negotiations fell apart last week--with Senator McCain at the center. And Dealbreaker has the draft of the plan, via Pelosi's office.