Bailout bill might need a bailout

A meeting at the White House yields little progress towards a deal on a big Wall Street bailout, and House Republicans are now pushing their own plan.

Published September 25, 2008 10:37PM (EDT)

WASHINGTON -- And now we know John McCain does not have the magic ability to fly into D.C., snap his fingers and fix the nation's economic crisis.

A meeting at the White House this afternoon with McCain, Barack Obama and leaders from both parties in Congress didn't yield much progress. ("It did not go well," one senior House Republican aide said.) Reportedly, McCain showed up with alternative proposals for the bailout, apparently trying to start the negotiating process all over again instead of tweaking a proposal that Senate Democrats and Republicans said they had reached an agreement over this morning. That plan, according to a memo circulating on Capitol Hill, would have doled out $250 billion immediately for Treasury Secretary Henry Paulson to buy toxic securities with, giving him another $100 billion if he certified he needed it. Congress would have to authorize the additional $350 billion the Bush administration says it wants. The plan would also have given the government some equity stake in companies that participate.

But by early evening, the situation was totally in flux. Aides on Capitol Hill said they didn't know exactly what was going on. House Republicans appear to be pushing an alternative proposal by Rep. Eric Cantor, which would have the government insure companies with bad loans on their books, rather than buying them.

Now Republicans seem to be getting ready to blame Democrats -- and by extension, Obama -- if they don't go along with the new scheme. Which would be a pretty nifty flip, given that the White House and Senate Republicans were ready to go along with changes pushed by Rep. Barney Frank and Sen. Chris Dodd, until this afternoon; instead of being the problem, the House GOP will try to set itself up as the solution. No doubt with an assist from McCain (who hadn't read the original bailout proposal earlier this week). But of course, this isn't a time for politics.

By Mike Madden

Mike Madden is Salon's Washington correspondent. A complete listing of his articles is here. Follow him on Twitter here.

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