Laura Litvan and James Rowley
Wednesday, Sept 24, 2008
Congressional leaders are weighing new ways to revise a $700 billion Wall Street rescue plan after it became clear that U.S. Treasury Secretary Henry Paulson’s proposal faces resistance from both Democrats and Republicans.
House and Senate Democratic leaders huddled late yesterday to consider new strategies, including the possibility of approving only a $150 billion initial installment for the government to purchase troubled assets from financial firms. Senator Charles Schumer of New York, the No. 3 Senate Democratic leader, said Paulson wouldn’t have time to use the full $700 billion before the Bush administration left office on Jan. 20.
“I know, ideally, you would like to just have as much as possible, but you are not going to use $700 billion in these three months,” Schumer told Paulson at a Senate hearing yesterday. Still, he said in Bloomberg Television interview today that he expects a plan to be approved by Congress within a week.
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Paulson said it would be a “grave mistake” to adopt Schumer’s proposal because it sent the wrong signal to the market and didn’t give Treasury “the tools to do the job.”
Leaders in both parties are working to shore up support for an effort to restore investor confidence. They also want to limit the risks for lawmakers who are being asked to vote on the biggest government intervention in the financial markets since the Great Depression, just six weeks before the elections.
Passage Not Certain
Senate Banking Committee Chairman Christopher Dodd and Senator Richard Shelby, the ranking Republican on the panel, told reporters after the hearing that there were serious questions that needed to be addressed before they can assess whether they’ll be able to find middle ground. Passage this year isn’t certain, Dodd said.
Still, Schumer said today that “the odds are overwhelmingly high that something will pass” after modifications because “there is a danger of doing nothing.”