WASHINGTON - (AP) - Urgent efforts to lash together a $700 billion rescue plan for the national economy broke apart Thursday night, hours after key lawmakers had declared they had reached a deal.
Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke sped to Capitol Hill to try to revive or rework the proposal that the administration says must be quickly approved by Congress to stave off economic disaster.
Congressional leaders were to meet with the economic chiefs intothe night.
After six days of intensive talks on the $700 billion package urgently requested by the Bush administration, with Wall Street tottering and the presidential election nearing, there was more confusion than clarity.
A tentative accord in principle among influential Democratic and Republican lawmakers was announced at midday, giving the Bush administration just a fraction of the money it wanted up front, with half the $700 billion total subject to a congressional veto, congressional aides said.
But conservatives were still in revolt, balking at the astonishing price tag of the proposal and the heavy hand of government that it would place on private markets. Sen. Richard Shelby of Alabama, the top Republican on the Senate Banking Committee, emerged from the White House meeting to say the announced agreement "is obviously no agreement."
Both of Congress' Republican leaders, Rep. John Boehner and Sen. Mitch McConnell, also denied there was any deal. And the White House called the earlier announcement progress but also said it was reviewing the outline with more work needed to finalize a bill for Congress to rush into law.
There is wide agreement the U.S. economy is in peril, with financial institutions going under or near the edge and recession looming along with the resulting layoffs and increased home foreclosures.
There had been hopes for broad agreement, too, on a prescription by now, with a confident White House announcement by the president, John McCain, Barack Obama and congressional leaders.
But the best McConnell would say afterward was, "It's clear that more progress is needed and we must continue to work together quickly to protect our economy."
One group of House GOP lawmakers circulated an alternative that would put much less focus on a government takeover of failing institutions' sour assets. This proposal would have the government provide insurance to companies that agree to hold frozen assets, rather than have the government purchase the assets. Rep Eric Cantor, R-Va., said the idea would be to remove the burden of the bailout from taxpayers and place it, over time, on Wall Street instead.