Bailout Deal Appears To Fall Apart After McCain And House GOP Push Surprise Alternate Proposal

Earlier today, Democratic and Republican leaders in Congress announced that they had reached a “fundamental agreement” on a government bailout of the nation’s financial system. But following a meeting at the White House this afternoon, which included Sens. John McCain (R-AZ) and Barack Obama (D-IL), there are “fears the Wall Street bailout deal is falling apart.”

In an interview with CNN this evening, Senate Banking Committee Chairman Chris Dodd (D-CT) said the meeting became “contentious” when “all of a sudden there was some new core agreement floating around, which no one had heard of before, until we sort of got to the White House.” Asked who introduced it, Dodd said it was McCain and the House Republicans:

BLITZER: Who introduced that?

DODD: Well, it, we’re told it came out of the Republican House. We were even told at one point that this was, maybe, John McCain was floating the idea. That Hank Paulson was considering it. And of course Barney Frank and I, along with Republicans from the House and the Senate, of course, had spent three hours this morning working on a different core. We were told for the last seven days this was the core issue that would give the secretary the authority to move, to deal with the crisis.

Aggravated from having “spent seven straight days at this,” Dodd said that the surprise proposal at the meeting “looked like…a rescue plan for John McCain for two hours.” “It took us away from the work we were trying to do today,” said Dodd. Watch it:

Noting that “it was McCain who urged President Bush to call the White House meeting,” Politico’s David Rogers writes that “the whole sequence of events confirmed Treasury’s fears about inserting presidential politics into what were already difficult negotiations.” One of the chief negotiators in the House, Rep. Barney Frank (D-MA), described it more bluntly:

House Financial Services Chairman Barney Frank, D-Mass., told Democratic colleagues that McCain’s involvement has destroyed chance of an agreement, sources told ABC’s George Stephanopoulos.

Frank compared McCain’s involvement to: “Richard Nixon blowing up the Vietnam peace talks in 1968.”

Marc Ambinder reports that McCain and his staff are sounding out “moderate Democrats and conservative Republicans to see whether they support the conservative Republican Study Committee’s alternative bailout bill.” McCain spokeswoman Jill Hazelbaker denies McCain is “pushing any specific proposal.”

ABC News’ George Stephanopoulos reports that when Treasury Secretary Hank Paulson told a room full of Democrats, “Please don’t blow this up,” House Speaker Nancy Pelosi said, “We’re not the ones trying to blow this up; it’s the House Republicans.” “I know, I know,” Paulson replied.


CBS News reports that the alternative plan McCain floated would “include fewer regulations and more corporate tax breaks for businesses.”

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,Ambinder now reports that “McCain himself did not bring up” the alternative proposals, though “Democrats were left with the impression that McCain endorsed the GOP efforts.”

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,Earlier today, Rep. Spencer Bachus (R-AL), who spoke to McCain twice in the past two days, told reporters that McCain was “just opposed” to the Paulson plan in “in its present form.”

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