House GOP Balks at Bailout

Conservative Republicans in the House are holding firm against the financial sector bailout as it is currently envisioned by Congressional Democrats and the White House. House Minority Leader John Boehner (R-OH) said earlier today that House Republicans had not been part of any agreement that Democrats may have thought they reached on the plan. Republican support is key to the passage of any plan because House Speaker Nancy Pelosi (D-CA) has made it clear that no plan will be brought to a vote in the House without majority Republican support. In other words, House Democrats don't want to own the eventual bailout package in case it doesn't solve the underlying problems in the nation's financial sector.

Republicans realize that they are holding leverage over Democrats in the negotiations and are now circulating a market based plan of their own. A core group of Republicans, led by Reps. Eric Cantor (VA), Adam Putnam (FL), and Paul Ryan (WI), are circulating a statement, titled, "Economic Rescue Principles," around which Republicans want to see a deal crafted. The list includes: an expansion of federal insurance for mortgage backed securities, rather than a federal purchase of them, to be paid for by a premium on the holders of the mortgages; temporary tax relief to free up private sector money to invest in the securities; a ban on Fannie Mae and Freddie Mac buying up sub-prime mortgages; and limits on benefits Wall Street executives can receive as a result of government intervention.

Meanwhile, the high-profile White House meeting between Republican and Democrat leaders in Congress, the president, and Sens. John McCain and Barack Obama broke with no agreement on a way forward. Without Republican support in the House, the Administration's proposal is dead on arrival. Sen. McCain, who suspended his presidential campaign to work on the crisis and who Senate Majority Leader Harry Reid (D-NV) originally said was key to the process of formulating a plan before McCain decided to come to Washington for just that purpose, will now try to broker a deal between conservatives in the House and the Administration. Sen. Obama's role, on the other hand, is far less defined. He has decided to stay in Washington overnight, rather than return to Florida for debate preparations. But his part in the process appears to be nothing more than being one of one hundred Senators who will eventually vote on whatever proposal Sen. McCain can put together between the opposing factions.