Thread: Talks collapse over bailout deal

BY HELEN KENNEDY
DAILY NEWS STAFF WRITER

Updated Friday, September 26th 2008, 2:25 AM

Anger and frustration boiled over from Washington to Wall Street Thursday as politicians failed yet again to agree on a $700 billion bailout to help end the financial crisis.

As workers marched in the streets outside the New York Stock Exchange in a display of fury at the package, Democrats and Republicans pointed fingers of blame at one another.

A tentative agreement got derailed at a heated White House meeting when top Republicans balked at signing on to President Bush's unpopular plan.

RELATED: BUSH WARNS OF BANK FAILURES

Banking Chairman Sen. Chris Dodd (D-Conn.) blamed House Republicans and Sen. John McCain for sidelining the agreement by springing a new plan, blindsiding leaders of both parties who had spent six days hammering out a deal.

"All of a sudden, there was some new core agreement floating around that we hadn't seen," a furious Dodd railed after the White House meeting.

"They said they would not accept the [Treasury Secretary] Hank Paulson core idea that we've all been working on. No one could explain it, and Hank Paulson couldn't describe it either," he said. "What this looked like to me was a rescue plan for John McCain."

The talks broke up after 10 p.m., more than an hour after the lone House Republican involved, Rep. Spencer Bachus of Alabama, left the room.

At one point, Paulson got down on one knee before House Speaker Nancy Pelosi (D-Calif.) in a theatrical attempt to salvage the talks.

Conservatives have complained that the plan would be too costly for taxpayers and would be an unacceptable federal intrusion into private business.

Negotiations are to resume this morning.

ANALYSIS: McCAIN'S DECISION TO SUSPEND CAMPAIGN

Lawmakers were caught between growing popular outrage over the notion of funneling billions of taxpayer dollars to Wall Street tycoons and dire warnings of economic apocalypse if they do nothing.

Unusual battle lines were being drawn: Most Senate Republicans and the White House joined most Democrats in backing a modified bailout, while House Republicans wanted to thwart it.

"I think there's going to have to be some discussion between President Bush, Secretary Paulson and House Republicans," said Sen. Barack Obama, who was summoned to the meeting by Bush along with McCain, Paulson and congressional leaders.

McCain appeared on ABC to say his talks with House Republicans convinced him "there never was a deal" but said he left the meeting optimistic.

"I think it gave us a renewed sense of urgency, and I'm confident we will move forward," he said.

RELATED: SIGN BAILOUT, THEN GO AFTER WALL ST. BIGS

Earlier in the day, Dodd had stood with Sen. Robert Bennett, the ranking Republican on the Banking Committee, to announce a "fundamental agreement" on a bill that Bush insists must pass before Monday.

"I now expect we will indeed have a plan that can pass the House, pass the Senate, be signed by the President and bring a sense of certainty to this crisis," Bennett said.

Participants said they had agreed to curb CEO "golden parachutes," establish strong oversight of the bailout and include efforts to reduce foreclosures.

Sen. Chuck Schumer (D-N.Y.) told CNBC the massive outlay of tax dollars would be broken into installments: $250billion up front, followed - if needed - by another $100 billion and then another $350 billion.

The stock market cheered, soaring to close up 196 points, even as hundreds of union workers protested against the bailout outside the Stock Exchange waving signs saying "No Blank Checks For Wall Street." Hours later, the deal was off.

"There is no bipartisan deal at this time," said House Minority Leader John Boehner (R-Ohio). "There may be a deal among some Democrats, but House Republicans are not a part of it."

There were reports that some Chinese banks had started cutting back lending to U.S. banks - a potentially ominous development suggesting the situation was deteriorating fast. But Beijing denied the claims.

Obama said inviting the candidates was not a good idea. "I've been concerned for some time that when you start interjecting presidential politics into delicate negotiations, you could actually create more problems than less," he told CNN.

"It is amazing what you can get done when the cameras are not on and people are not looking to get credit or allocate blame," Obama said. With Stephanie Gaskell

hkennedy@nydailynews.com

With News Wire Services

Rudy Giuliani's 'crass opportunism' reflects on Mac: Dems
BY DAVID SALTONSTALL
DAILY NEWS SENIOR CORRESPONDENT
Friday, September 26th 2008, 2:45 AM
Rudy Giuliani is positioning his law firm to cash in on Wall Street's train wreck - a move that has become a gift to political enemies of his pal John McCain.

Even as the nation's $700 billion, taxpayer-funded Wall Street bailout was still being hashed out, the former mayor announced Thursday his high-powered law firm has set up a task force.
Its mission: to help corporate clients get a piece of the action - or keep the federal wolves from the door.
"Our team of former government officials and experienced attorneys in the fields of legislation, enforcement and finance are equipped to guide institutions in this quickly evolving and complex environment," Giuliani noted in a press release from his law firm, Bracewell & Giuliani.
Giuliani is not the only one poised to profit from opportunities created by the mega-meltdown, but he is the most politically famous.
Giuliani is a prime surrogate for Republican McCain, who has called the economic meltdown "the greatest crisis since the end of World War II" and has assailed Wall Street for "unbridled greed."
Democrats argued that Giuliani's latest business pitch reflected poorly on the Arizona senator, a longtime friend who chose the former mayor to give the keynote speech at the GOP convention.
"Bracewell & Giuliani's crass opportunism raises serious questions about whether John McCain is comfortable with one of his most visible campaign surrogates trying to cash in on what Alan Greenspan called a once-in-a-century economic crisis," Democratic National Committee spokesman Damien LaVera told the Daily News.
McCain campaign officials declined to comment.
The Republican National Committee accused Democrats of hypocrisy, noting that Team Obama sent out a fund-raising letter last week that attempted to exploit the current financial mess.
"The hypocritical and ridiculous attacks launched by Democrats demonstrate a lack of seriousness that should concern the American people," RNC spokesman Danny Diaz said.
"Sen. McCain is focused on finding a solution to our economic challenge, while Barack Obama is in debate camp and his minions launch insults."
Members of Giuliani's task force will include a number of Bracewell & Giuliani employees with deep connections to Washington in general and the Bush White House in particular.
They include Marc Mukasey, a former federal prosecutor in Manhattan and the son of U.S. Attorney General Michael Mukasey.
The elder Mukasey is one of Giuliani's closest friends and, as a federal judge, swore in Giuliani at both his mayoral inaugurations.
Another task force member will be Robert Clarke, a one-time director of the Resolution Trust Corp. - the government-owned outfit set up in the wake the last major government bailout, the savings and loan crisis of the 1980s, to sell off assets.
Bracewell & Giuliani spokeswoman Melanie Hillis declined to say how much the firm would be charging.
Top-shelf firms like Bracewell & Giuliani routinely charge corporate clients fees topping $800 an hour for every senior lawyer's time - or a commission based on the value of transactions that could reach billions of dollars.
dsaltonstall@nydailynews.com