Congressional Democrats began to set their own terms on Sunday for a plan to rescue the nation’s financial institutions, including greater legislative oversight of the Treasury Department, more direct assistance for homeowners and limits on the pay of top executives whose firms seek help.
The Democrats’ demands came as Treasury Secretary Henry M. Paulson Jr. blanketed the Sunday talk shows to promote the Bush administration’s $700 billion bailout package, emphasizing that it was needed not just for Wall Street, but for all Americans. He urged Congress to move swiftly to approve a “clean” rescue plan without tacking on extra programs.
“I hate the fact that we have to do it, but it’s better than the alternative,” Mr. Paulson said on “Fox News Sunday.”
The Bush administration proposal could be the largest government bailout of private industry in the nation’s history, and it calls for nearly unfettered powers to the Treasury secretary. There is intense pressure to pass a rescue measure quickly because the markets remain jittery.
Still, competing interests were already complicating the negotiations, as Democrats pushed for assistance for distressed homeowners and for oversight authority of the bailout program. Some lawmakers also said they did not want to be rushed into approving extraordinary new powers for the Treasury secretary and the government without full consideration of the consequences.
Both presidential nominees, who face the prospect of inheriting an enormous new program, said there had to be more oversight of the Treasury Department than the Bush administration had proposed.
Financial companies were already lobbying to broaden the plan. And the Bush administration did indeed widen the scope by allowing the government to buy out assets other than mortgage-related securities as well as making foreign companies eligible for government assistance.
Banks and traders also braced themselves for another tumultuous week in the markets. But early signs indicate that investors in Asia were reacting positively to the developments in Washington. Shares in Asia jumped in early trading on Monday morning, as investors took their cues from a rally on Wall Street on Friday. The Nikkei 225 index climbed 2 percent in early trading in Tokyo, and the Kospi index rose 3 percent in Seoul, South Korea.
The Standard & Poor’s/Australia Stock Exchange 200 index increased 3.6 percent after markets there opened a half-hour late. The opening was delayed to allow time for further details to be issued regarding a monthlong ban imposed by Australian regulators on all short selling of shares traded on the exchange.
Meanwhile, top Democrats and Republicans on Capitol Hill said on Sunday that they would act swiftly on the administration’s request, but not without setting their own conditions.
“Congress will respond to the financial markets crisis by taking action this week in a bipartisan manner that will protect the taxpayers’ interests,” House Speaker Nancy Pelosi said. She added that the administration’s proposal did “not include the necessary safeguards. Democrats believe a responsible solution should include independent oversight, protections for homeowners and constraints on excessive executive compensation.”
“We will not simply hand over a $700 billion blank check to Wall Street and hope for a better outcome,” she said.
Congressional Republicans, too, put the Bush administration on notice that they would not rubber-stamp the bailout proposal but would insist on a number of changes, including specific protections for taxpayers. Those would include a requirement that any profits from the program be returned to the Treasury.
Aides to senior House Republicans said that lawmakers would also demand greater oversight of the program and were proposing a joint select committee, consisting of members of both parties and both chambers of Congress.
Top administration officials and senior lawmakers said that the markets could be devastated if Congress and the administration failed to reach agreement on the plan.
On Sunday, Mr. Paulson defended the plan and the administration’s decision to expand it to protect foreign companies and authorize even wider latitude to buy assets other than those that were backed by mortgages.