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— Democrats won a key concession from the White House on legislation to bail out the financial industry on Wednesday, then sought to scale back the $700 billion price tag, as Republican presidential nominee John McCain inserted himself into high-stakes negotiations on the rescue.
President Bush invited McCain and Democratic presidential nominee Barack Obama, along with congressional leaders, to a White House meeting Thursday to discuss the bailout.
With the administration's original proposal deeply unpopular in Congress, top House leaders issued an upbeat statement at day's end saying that they had made progress toward revised legislation. "We are committed to continuing to work cooperatively and on a bipartisan basis to safeguard the interests of the American taxpayers," said Speaker Nancy Pelosi, D-Calif., and House Republican leader John Boehner of Ohio.
But they offered no timetable on a bailout that the administration said was needed more with each passing day.
Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke spent most of the day in the Capitol, shuttling between public hearings on the proposal and private meetings with lawmakers.
Presidential politics intruded, as well, when McCain said he intended to return to Washington and called on Bush to convene crisis meetings until an agreement was reached on legislation.
In their statement, Pelosi and Boehner said, "We agree that key changes should be made to the administration's initial proposal. It must include basic good-government principles, including rigorous and independent oversight, strong executive compensation standards and protections for taxpayers."
Earlier, Paulson agreed to demands from critics in both parties to limit the pay packages of Wall Street executives whose companies would benefit from the proposed bailout.
"The American people are angry about executive compensation and rightfully so," Paulson told the House Financial Services Committee. "We must find a way to address this in the legislation without undermining the effectiveness of the program."
The issue has been a much-debated point in the struggle to win congressional approval of the historic rescue of the financial industry, though the "golden parachute" money involved would be relatively insignificant compared with the huge sums being talked about.
At the same time, Democrats were asking the Bush administration to dramatically cut the size of the rescue and then come back to Congress later if they need more.
Under that plan, which was still emerging, Congress would approve a fraction of what Bush is asking for — perhaps $150 billion or $200 billion — to allow the government to begin rescuing tottering financial companies.
Pelosi has privately suggested the idea to Paulson, according to officials who spoke on condition of anonymity because the negotiations are private.
Sen. Chuck Schumer, D-N.Y., pressed Paulson on the idea Tuesday and was told it would be a "grave mistake."
But some Republicans said they support it as well. "It's highly appropriate for them to come back to us once they see and we see how this is working," said Sen. Bob Corker, R-Tenn.
Rep. Barney Frank, D-Mass., said Wednesday, "Ultimately $700 billion has to be available but ... they are making progress about how to give people some assurance that it is not going to go to $700 billion in one fell swoop."
Frank, who as chairman of the Financial Services Committee has taken a lead in the negotiations, said Paulson also "accepts the fact" that the bill will give the government an ownership stake in the companies whose bad debts are taken over, a Democratic goal.
The heart of the unprecedented plan, dramatically unveiled less than a week ago, involves the government buying up sour assets of tottering financial firms to keep them from going under and to stave off a potentially severe recession and the accompanying lost jobs and further home foreclosures.
Away from Washington, debate over the bailout became embroiled in presidential politics as McCain said he was returning to the capital and was asking Democratic rival Barack Obama to agree to delay their first debate, scheduled for Friday, to deal with the meltdown.
"I do not believe that the plan on the table will pass as it currently stands, and we are running out of time," he said.
Obama said the debate should go ahead and that his campaign staff was working with McCain's on a statement the candidates might make, spelling out major points they believe the rescue legislation must include.
Congressional Democrats dismissed McCain's dramatic announcement as a political ploy and said his involvement in the talks six weeks before the elections would only muddle the extraordinarily sensitive debate.
"With all due respect to my friend John McCain, we're doing just fine. We should not have presidential politics enter what we're doing here," said Sen. Harry Reid, D-Nev., the majority leader. He added that McCain "is trying to divert attention from his failing campaign."
Bush, who says the massive government intervention is needed to stave off economic catastrophe, planned to talk to the American people Wednesday night about how the crisis affects them, said White House press secretary Dana Perino.
Wall Street, down sharply the previous two days, basically marked time, waiting for the next shoe to drop. The Dow Jones industrials declined 29 points.
Lawmakers in both parties have strenuously objected to the plan over the past two days, Republicans complaining about federal intervention in private business and Democrats pressing to tack on help for beleaguered homeowners.
Many Republicans and Democrats appear to be more open to legislation, although on different terms than the White House has proposed.
"There's politically a lot of pessimism because the American people are pushing back," said Rep. Spencer Bachus of Alabama, the senior Financial Services Committee Republican. But, he added, "There's a realization that we have to do something, and that we can't leave town until we do."
Polls in the last several days have provided mixed messages about the public's view.
An ABC News-Washington Post poll said Wednesday the public is split about evenly over whether it supports federal "steps" to handle the financial crisis. In a survey released Tuesday by the nonpartisan Pew Research Center, there was nearly two-to-one support for the government "potentially investing" billions to try securing the markets.
Democrats insist Republican lawmakers must stand up for their own president's proposal, but they appear anything but eager to do so.
"It's a tough sell to most of our members," said Rep. Tom Davis, R-Va., after a closed-door meeting with Paulson and Bernanke. "It's a terrible plan, but I haven't heard anything better."
Compounding the administration's challenge, Republicans and Democrats both say Bush has lost credibility, particularly in cases where he argues there will be dire consequences if Congress doesn't act.
"They sold the war, they sold the stimulus package and some other things. It's the 'wolf at the door'" argument, Davis said.
Democrats are pushing to allow bankruptcy judges to rewrite mortgages to ease the burden on consumers who are facing foreclosure as part of the plan. But Obama told reporters the provision "is probably something that we shouldn't try to do in this piece of legislation."
Other Democratic demands, to give Congress greater authority over the bailout and require that the government help homeowners avoid foreclosures, have already been accepted in principle.
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Associated Press writers Jennifer Loven, Martin Crutsinger, Jeannine Aversa and Alan Fram contributed to this report.
