House Republicans' Bailout Alternative Takes Mortgage Insurance Approach

Washington, D.C. (AHN) - House Republicans, whom Democrats are accusing for the breakdown of bailout negotiations, are offering an alternative to the government's plan to purchase devalued assets with one that insures all mortgage-backed securities.

The meeting at the White House Thursday afternoon between Congressional leaders, President George W. Bush and the two presidential candidates ended with no agreement on the administration's $700 billion plan to bail out the nation's financial firms. It led to an emergency meeting between Treasury Secretary Henry Paulson and lawmakers late that night that did not include House Republicans.

Lawmakers had said earlier Thursday that a "fundamental agreement" had been reached on the plan. They had agreed to immediately give $250 billion to the Treasury Department and then another $100 billion if Paulson thinks the money will still be needed. The remaining $350 billion would only be released upon approval by Congress.

But House Minority Leader John Boehner (R-OH) maintained throughout Thursday that no agreement had been reached. "I am encouraged by the bipartisan progress being made toward an economic package... However, House Republicans have not agreed to any plan at this point. We owe it to all those with a stake in this process to continue our discussions until we arrive at an agreement that is acceptable on both sides of the aisle," he said in a statement.

Republican congressmen want the government to insure half of all the mortgage-backed securities it does not already insure. Holders of the assets will be the ones to pay for the premiums rather than taxpayers.

They also want temporary tax cuts and a suspension of regulatory measures "to address the problems surrounding private capital liquidity."

House Speaker Nancy Pelosi (D-CA) has said the expressed openness in changing the current bailout bill to include Republican provisions but cautioned that she still "know the full substance" of the GOP alternative and that quick action was needed on the bailout.

"If it's something that can be included in the bill, in terms of the authority given to the Treasury Secretary, I'm sure that can be worked out. If it's contradictory to the purposes of the legislation, then that's up to the Secretary to decide," Pelosi said in a press conference Thursday night.

"But we're interested in moving forward and to accommodate many good ideas and because the issue is so urgent, another time, a less urgent situation, we could take all the time in the world, to have an academic discussion of many possibilities. But right now, as I have said before, time is of the essence," she added.

House Financial Services Committee Chairman Barney Frank (D-MA), one of the top negotiators, has said the proposal being pushed by Republicans had previously been rejected by Paulson, according to Politico. But a spokesman for Paulson has told Bloomberg the Treasury secretary "appreciates the hard work by members on both sides of the aisle" and has not rejected any proposals.