CARL HULSE and DAVID M. HERSZENHORN reports from Washington in the New York Times Online, on September 19, 2008, 'Gathered in the conference room just off House Speaker Nancy Pelosi’s personal suite on the second floor of the Capitol, the Congressional leadership had just received the sobering news Thursday night that America’s economy remained in peril despite a series of sudden interventions by the Federal Reserve.
Senator Christopher J. Dodd met with members of his staff on Friday. He was in the meeting Thursday night when Treasury Secretary Henry M. Paulson Jr. and Fed Chairman Ben Bernanke unveiled a plan to use billions in dollars to buy bad debt.
Then the other shoe dropped. Treasury Secretary Henry M. Paulson Jr. told top members of both parties — about to leave Washington to assail one another in a bitter election season — that they had no choice but to pull together and quickly pass legislation providing billions of public dollars to take bad assets off the hands of the nation’s financial institutions.
"Do you know what you are asking me to do?" said Senator Harry Reid, the Democratic majority leader who has struggled all year against concerted Republican opposition, according to multiple participants at the Thursday night session. "It takes me 48 hours to get the Republicans to agree to flush the toilets around here."
At that point, Senator Mitch McConnell of Kentucky, the Republican leader who duels constantly with Mr. Reid, reached over to assure his colleague they could work it out. "Harry," Mr. McConnell said, "I think we need to do this, we should try to do this and we can do this."
As Congress waited Friday for details of the plan, Congressional officials said members of both parties remained willing to move ahead despite reservations from the rank-and-file about exposing taxpayers to staggering costs that have yet to be disclosed.
In telephone briefings with lawmakers, Mr. Paulson and the Fed chairman, Ben S. Bernanke, sought to make it clear that the price of doing nothing could be calamitous.
"If we don’t get this, it will be nothing short of a disaster for our markets," Mr. Bernanke told House Republicans in a conference call Friday, according to a detailed account of the call.
At the same time, Democrats sought to make it clear the final proposal had to take care of the general public as well as Wall Street.
Referring to a phone conversation with President Bush early Friday, Ms. Pelosi said: "As I told the president this morning, we are committed to quick, bipartisan action while ensuring that we uphold key principles — insulating Main Street from Wall Street and keeping people in their homes by reducing mortgage foreclosures, restoring market confidence and protecting American taxpayers from incurring hundreds of billions of dollars of debt."
Yet it is evident that sentiments disclosed by the financial officials in the meeting Thursday night and in other briefings have made a strong impression on Congress. And the seriousness with which the administration is approaching the issue was evident in the fact that Mr. Bush for the first time in weeks also telephoned Mr. Reid, with whom he has had a strained relationship, to ask for his help in pushing through legislation.
Senator Charles E. Schumer of New York, the No. 3 Democrat, said that the Thursday-night session contained not a bit of levity and that the description of the financial predicament made him gulp. "When you get 20 politicians together and no one makes a joke, you know something is going on," he said.
Although Mr. Schumer and others have declined to repeat precisely what they were told by Mr. Paulson and Mr. Bernanke, they said the two men described the financial system as effectively bound in a knot that was being pulled tighter and tighter by the day.
"There was a long pause in the room," Senator Christopher J. Dodd, Democrat of Connecticut and chairman of the Banking, Housing and Urban Affairs Committee, said.
In the Republican conference call Friday, Mr. Bernanke sought to remind lawmakers that voters have money at risk, not just Wall Street executives.
"Many of your constituents hold money in money markets — those funds are losing money," he said, according to the account of the call provided by a listener. He blamed the deep problems in the housing market and said that the "critical issue is what do we do about these bad assets clogging up our credit system."
The financial crisis comes at a delicate time for Congress. Lawmakers had been preparing to dispose of a few legislative issues and then adjourn at the end of next week for the elections. But the push for financial legislation has upended the schedule and given the two parties some incentive to work together.
Republicans warned Friday that Democrats should not try to take advantage of the situation, with Representative John A. Boehner of Ohio, the Republican leader, saying the plan has to be kept "as simple and straightforward as possible."
"Loading it up to score political points or fit a partisan agenda will only delay the economic stability that families, seniors and small businesses deserve," he said.
Some conservatives who had already raised the alarm over federal intervention in the markets remained deeply skeptical of the plan.
"We are being asked to go ‘all in’ with taxpayer dollars, and once our government and the taxpayer is on the hook, there is no fallback option," said Representative Jeb Hensarling of Texas, chairman of the conservative Republican Study Committee. "My fear is that taxpayers will be left with the mother of all debts, the federal government becomes the lender and guarantor of last resort and our nation finds itself on the slippery slope to socialism."
Yet Republican leaders appeared determined to go along with the administration plan. "This is a very serious, very unpleasant problem to deal with," said Senator Lamar Alexander of Tennessee, No. 3 in the Senate Republican leadership. "But we must act next week to solve this situation."
In their Friday conference call with Treasury and Fed officials, House Democrats, according to participants, accepted that the bailout was necessary but also faulted the administration for a reckless economic approach that combined deregulation, deficit spending and bad management.a
In the closed-door Thursday night meeting, Democrats sought to make it clear to Republicans that the underlying initiative for the financial rescue was coming from the administration and that it was the White House that owned the proposal.
Participants said Representative Steny H. Hoyer of Maryland, the majority leader, was particularly emphatic, noting that the administration was requesting unprecedented action on short notice, effectively telling Congress, "Trust us."'