Like other major national crises, last week¹s near meltdown of the financial markets forced Congress to throw aside partisanship and pledge to work together to quickly pass major legislation to help fix the problem.
In this case, Congress is preparing to take an unprecedented step that will allow the government to purchase troubled mortgages from banks and other financial institutions in a plan that will cost the nation at least $700 billion.
While some lawmakers are balking at the proposal, unveiled after they held an emergency meeting Saturday with administration officials, it is on course for easy approval from Congress and a signature from the president as early as this week.
“I think they have little choice but to sign on to whatever is proposed,² said University of Maryland political science professor Roger Davidson, who studies Congress.
The Bush administration¹s need for cooperation from the Democratic majority has given House Speaker Nancy Pelosi a bargaining chip that may allow her to revive a $50 billion economic stimulus package that the president has said earlier he would not approve.
Pelosi sent a letter to Bush on Friday saying worsening economic conditions require additional federal money that would pay for new infrastructure, heating assistance, unemployment insurance and food stamps.
House Democrats said they also want the Bush proposal to include money to help homeowners stop foreclosures and prevent bankruptcy as well as language that would curb the compensation of the executives of the firms receiving bailout money from the government.
House Minority Leader John Boehner, R-Ohio, said Sunday on ABC News that he opposed adding the Democratic provisions to the bill. “We need to keep it clean, simple, move it through the House and Senate, get it on the president¹s desk so [Treasury Secretary Henry Paulson] can in fact intervene as quickly as possible.² The quick decision by Congress to take this dramatic step came after a sobering meeting Thursday night with Paulson and Federal Reserve Chairman Ben Bernanke, who told leaders there would be grave consequences if Congress failed to act.
At that point, the financial markets were in a steep downward spiral, and the threat of collapse of more banks appeared imminent.
“There is very little time to put this thing together because of the immediate need to reassure both the public and the financial community,” Davidson said.
The ominous words of the Bush administration officials were enough to persuade the typically bailout-averse GOP to sign on. Bernanke and Paulson held a conference call Friday with 120 Republicans and were “very stark about the consequences of not taking the action they recommend,” said a participant in the call. No participants in the call registered their opposition.