How parties made capital out of White House talks

WHEN US president George Bush sat down in the White House at 4pm on Thursday with congressional leaders and the Democratic and Republican presidential candidates, it appeared that agreement on his $700 billion financial bailout was imminent.

A few hours earlier, leading figures from both parties on the Senate banking committee and the House financial services committee had agreed a framework for the bailout.

John McCain had suspended his campaign to fly to Washington, promising to work towards a compromise, and Barack Obama had returned to the capital too, with a little less enthusiasm.

Mr Bush, who had warned Americans the previous evening that their entire economy was in peril, was willing to modify the bailout plan to include more protection for taxpayers' money and limits on salaries for top executives of the financial institutions that would benefit from the plan.

Soon after the meeting began, however, House minority leader John Boehner said Republican congressmen could not support the deal without much more radical changes. He proposed an alternative plan that would see a bigger role for the private sector in the rescue, with distressed mortgage assets being insured rather than bought by the government.

Democrats reacted with outrage, accusing Mr Boehner of wrecking the compromise worked out earlier in the day and of acting on behalf of Mr McCain. "What this looked like to me was a rescue plan for John McCain for two hours," said Senate banking committee chairman Chris Dodd, who had all but declared the deal done earlier in the day. "To be distracted for two to three hours for political theatre doesn't help."

Republicans insisted the votes were simply not there in their party and more changes were needed if Democrats wanted to avoid approving the rescue plan on their own.

Mr McCain said little during the White House meeting, speaking last and declining to endorse either of the plans. Mr Obama, on the other hand, spoke on behalf of the Democratic leadership, peppering Treasury secretary Hank Paulson with questions about the deal and demanding that Republican leaders do more to persuade their own rank and file of the necessity of finding agreement.

As Democrats left, Mr Paulson followed them, imploring them not to "blow up" the deal and genuflecting before House speaker Nancy Pelosi as he asked her not to abandon it. "I didn't know you were Catholic," she said.