WASHINGTON — Congressional negotiators remained stalemated Friday over details of a financial rescue plan, with Republicans insisting on a new insurance program while Democrats and the White House wanted a $700 billion government bailout to aid troubled banks.
After an intense week of debate and division, though, the mood was notably calmer, possibly because financial markets didn't collapse — the Dow Jones Industrial Average closed up 121.07 on Friday — and constituents flooded congressional offices with calls and e-mails demanding a solution that could be both easily explained and fair to taxpayers.
"The first thing constituents do is express outrage at $700 billion. Then they say they're trusting you to do the right thing before you come home again," said Sen. Lamar Alexander, R-Tenn.
Negotiations proceeded among different legislative staffs, but there were no bipartisan talks among lawmakers. They could reconvene Saturday, and House Financial Services Committee Chairman Barney Frank, D-Mass., said he was "convinced by Sunday we will have an agreement people can understand on this bill."
Getting there will be a struggle, but perhaps less caustic than it was on Thursday.
One reason is that Republican presidential nominee John McCain, who helped lead a GOP revolt Thursday by raising questions about a tentative bipartisan deal, left Washington to debate Democratic rival Barack Obama in Mississippi.
"Now that Sen. McCain is safely in Mississippi, we're back to serious work," said Frank.
During bipartisan negotiations Thursday night, two people in the room said that Treasury Secretary Henry Paulson was raising questions about "principles" that negotiators thought had been agreed to on Thursday.
Paulson expressed reservations about limiting pay for executives at firms that benefit from the bailout, an equity stake for taxpayers in those companies and the provision that would allow the $700 billion to be available only in stages.
Paulson had indicated at hearings earlier this week that he supported some limits on executive pay, but apparently had questions about specifics.
Adding to the uncertainty were doubts raised by the rank and file from both parties. Some Democrats were concerned the full package would be a hard sell, and House Republicans united behind Minority Leader John Boehner of Ohio.
Senate Banking Committee Chairman Christopher Dodd, D-Conn., had expressed surprise Thursday when House Republicans proposed an insurance plan to help troubled financial firms. But in a letter addressed to House Speaker Nancy Pelosi, D-Calif., Boehner stressed that no one should have been shocked.
"Over the last week, we have frequently discussed Secretary Paulson's proposal, and I have repeatedly expressed the need for improvements on behalf of myself and my Republican colleagues," the congressman wrote.
Frank hotly disputed that assertion, saying that the insurance plan never came up in talks with Republicans or at a lengthy hearing with Paulson and other administration officials on Wednesday.
Still, Democrats need Republicans on board to pass any plan. With elections just over five weeks away, neither party's lawmakers want to take sole responsibility for a costly bailout that remains unpopular with many voters.
House Republicans were upbeat that their plan was being examined. It would have the government insure risky securities rather than buy them. While they offered few specifics, a fact sheet explained that currently, the government insures about half of all mortgage-backed securities.
"We can insure the rest of current outstanding (securities). However, rather than taxpayers funding insurance, the holders of these assets should pay for it," the GOP said. Treasury would craft a system to charge premiums to securities-holder that would "fully finance" the insurance.
But Paulson has voiced opposition to the plan, and Democrats scoffed at it.
Earlier Friday, President Bush tried to give lawmakers a fresh push, saying in a statement Friday morning, "This is hard work. Our proposal is a big proposal. The reason it's big is because we have a big problem. We also need to move quickly," Bush said in halting tones.
He tried to downplay the conflict that has, for now, scuttled any deal.
"Members want to be heard. They want to be able to express their opinions and they should be able to express their opinions," he said in a brief statement delivered just as U.S. stock markets were opening. "There are disagreements over aspects of the rescue plan, but there is no disagreement something substantial must be done."
Remember, Bush said, "the legislative process is sometimes not very pretty, but we are going to get a package passed. We will rise to the occasion. Republicans and Democrats will come together and pass a substantial rescue plan."
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