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"There are a lot of options on the table," House Minority Leader John Boehner, R-Ohio, told reporters Friday afternoon. "Congress needs to act quickly, but we need to act to protect the American taxpayer first and foremost." Reps. Eric Cantor, R-Va., Paul Ryan, R-Wis., and Jeb Hensarling, R-Texas, backtracked Friday somewhat from their original proposal introduced Thursday that would replace the government mortgage-backed asset purchase plan with a proposal to have the federal government insure mortgage-backed securities rather than buy them outright. On Friday, Cantor argued that insurance wouldn't work for some particularly illiquid assets, and those would have to be purchased by the government in an approach similar to that backed by Democrats and Treasury Secretary Henry Paulson. But he contended that the vast majority of financial institutions would see their value rise significantly because they are getting a government guarantee in the form of federal insurance. Boehner declined to comment on whether he would support that or agree to back a $700 billion bailout package originally introduced by Paulson but now weighed down with numerous conditions. Nevertheless, a number of House Republicans seemed to still be supportive of some variation of the original Paulson plan. House Financial Services Committee Ranking Member Spencer Bachus, R-Ala., said GOP members have increasingly moved toward a package that would authorize $700 billion but only appropriate $200 billion under supervision of Congress. Many House GOP members are supportive of the inclusion of a measure that would have the Treasury Department take equity stakes or warrants in participating financial institutions. Bachus said many House Republicans and Democrats would like to see an independent board appointed by Congress that would oversee the allotment of the loan capital, rather than giving the authority for the funds to the treasury secretary. Bachus argued that there would be a perceived conflict of interest if Congress rubber stamped Paulson's plan and he later went to work for a financial institution receiving a large amount of capitol. (Prior to becoming treasury secretary, Paulson led Goldman, Sachs & Co.) "You don't give discretion to secretary of treasury, you give it to a board," Bachus said. "I don't want the person you give a loan to be working for a certain company. There are some five or six investment banks that will receive 60% to 80% of this money and you don't give one person this kind of power." Bachus added that he believed that House Republicans have increasingly supported a bailout plan that would limit the executive compensation of those running participating financial institutions. He also said that both transparency and oversight are key areas everyone supports. Some other Republicans supported a measure that would combine Cantor's provision with one based on the original Paulson version. "I wouldn't describe the Cantor proposal as a take it or leave it provision," said one House member. "We are working on a bill that implements as many Republican principles as possible to protect the taxpayer." Rep. Christopher Shays, R-Conn., argued that the measure should have a combination of the two approaches. "It's got to have some sort of insurance provision, its got to have some form of equity for government, the taxpayer has to be protected," said Shays. On the Senate side, Republican lawmakers appeared to be more supportive of a plan that focuses more heavily on the $700 billion Paulson approach and less on the Cantor insurance strategy. Sen. Sam Brownback, R-Kan., said he will consider the insurance approach authored by Cantor, but he was leaning in the direction of the Paulson approach, but with equity stakes and have fund allocations take place in pieces. "Paulson and [Fed Chairman Ben] Bernanke are the lead guys in the field; they are our General Petraeus and [General Raymond] Odierno on this, and they have a lot of smart people around then," Brownback said. "They have more capacity to analyze this, and we anticipate they will go first." Sen. Robert Bennett, R-Utah, said he still thinks that Republicans are supportive of a variation of the Paulson plan discussed with Democratic leadership Thursday, rather than the one authored by Cantor. "The issues are narrowing and focusing on the final product," Bennett said. "I'm still in favor of the basic deal discussed yesterday." Other senators including Tom Coburn, R-Okla., and Mike Enzi, R-Wyo., appeared generally supportive of the Paulson plan. "I'm generally interested in a lot of the provisions that are in there. Progress is being made, and we could wind up with something," said Enzi. Other senators were more conservative in their assertions. Sen. Arlen Specter, R-Penn., said he wanted to see the final package before deciding whether he would support it or not. "You get two economists and get three opinions," Specter said. "We can't haggle too long but I'm gong to examine what we get and try to figure it out from that." Republicans have appointed Rep. Roy Blunt, R-Mo., to negotiate for House GOP members and Sen. Judd Gregg, R-N.H., to bargain for Senate Republicans. The two representatives will be negotiating with Senate Majority Leader Harry Reid, D-Nev., and Senate Banking Committee Chairman Christopher Dodd, D-Conn. In a morning press conference, Dodd indicated that Democrats might be willing to back off some of the provisions they know are opposed by many Republicans to get a deal done quickly. - Ron Orol Ron Orol is a Washington-based reporter for The Deal and author of Extreme Value Hedging: How Activist Hedge Fund Managers Are Taking on the World. Categories Deal Video
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While Senate Republicans appear to be more in line with a $700 billion bailout legislation being pushed through by Democrats and the Bush administration, GOP House of Representative members still are divided about whether they want to support it or go a different direction.
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