Financial Reform Watch

Pressure to Produce a Bipartisan Compromise

Leading negotiators from the House and Senate began a negotiating session at noon today with a goal to work as long as it takes to resolve the 15 issues remaining on the table. They are taking a break as we write this, with plans to return to their discussions this evening. Secretary Paulson is in the Capitol to assist the negotiators and ensure the Administration's views are being taken into account. Momentum continues to build towards the announcement of a deal by Sunday afternoon. Leaders of the House and Senate hope to have votes on Monday, but the complexities of drafting the legislation may require that votes be pushed off until after Rosh Hashanah which ends on Tuesday at sundown.

As this afternoon's negotiating session began Sens. Judd Gregg (R-NH) and Mitch McConnell (R-KY) both said the Senators and Representatives meeting today would stay in the room until a deal was reached. While that may be over-optimistic, it is indicative of the fact that these leaders are feeling pressure to get something accomplished.

News has been sparse this afternoon as the negotiations go on. However, as the session began some of the contours of the discussions came into better focus. One new issue has been brought to the table. Negotiators are considering a proposal that would at some future point impose fees on financial institutions to recover any losses the Treasury might suffer after the sale of assets purchased under the program. There is also controversy over proposals for what to do in the event the Treasury earns profits from the sale of assets. A Democratic proposal to create an affordable housing fund with those profits is attracting opposition from Sen. Lindsay Graham (R-SC), who believes profits should be used to retire the national debt.

Negotiators have also been discussing ways to stage the release of the $ 700 billion to purchase assets. One proposal would give the Treasury Secretary immediate authority to invest $250 billion and then release the next $100 billion when he certifies to Congress it is needed. The final $350 billion could be stopped or the total amount reduced if Congress passed a joint resolution of disapproval. There is considerable controversy over this proposal and it appears that it will occupy significant time in the discussions.

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