WASHINGTON — WASHINGTON - The Bush administration and congressional leaders moved closer to an agreement on a historic $700 billion bailout for financial firms yesterday, including tight congressional oversight and new help for homeowners at risk of foreclosure.
But lawmakers in both parties voiced anger over the steep cost and even skepticism about the plan's chances of success.
As a ferocious debate began on Capitol Hill yesterday, Congress and the administration remained at odds over specific features that some lawmakers are demanding, including limits on the pay of top executives whose firms seek help and new authority to allow bankruptcy judges to modify mortgage terms for borrowers facing foreclosure.
Congressional leaders and Treasury officials also said they were close to an agreement over a proposal by some Democrats in which taxpayers could receive an ownership stake, in the form of warrants to buy stock, from firms seeking to unload distressed debt.
The administration would accept this provision as long as it did not require it to obtain an equity stake, a Treasury official said.
Despite the progress, the rancorous debate ratcheted up the pressure on Treasury Secretary Henry M. Paulson Jr. and Federal Reserve Chairman Ben S. Bernanke, the architects of the proposal.
Both are scheduled to appear today before the Senate banking committee, where they must now push the bailout plan.
"I am concerned that Treasury's proposal is neither workable nor comprehensive despite its enormous price tag," Sen. Richard C. Shelby of Alabama, the senior Republican on the banking committee, said in a statement.
While congressional leaders in both chambers said they were confident that they could reach a quick deal, it was also clear that Paulson and Bernanke would face rough questioning and that initial support for the bailout had begun to fray. Some conservative Republicans also expressed outrage.
Treasury officials brushed off the protests from influential Republicans, including Shelby. They said they were confident that Republican leaders could bring their members along. "We are making progress and have confidence that a plan will pass by the end of this week," said Michele Davis, a spokeswoman for Paulson.
President Bush yesterday urged Congress to act fast. "Americans are watching to see if Democrats and Republicans, the Congress and the White House, can come together to solve this problem with the urgency it warrants," he said in a statement. "The whole world is watching to see if we can act quickly to shore up our markets."
The majority leader, Sen. Harry Reid of Nevada, said Democrats were prepared to do so. "Democrats in the Senate aren't going to drag our feet," he said in a speech on the Senate floor. "We'll respond with the urgency of action that this situation demands."
Officials said the administration was also prepared to adopt conflict-of-interest rules for any private firms hired to help the Treasury manage the bailout program. Some lawmakers were worried that such firms might also own assets that could grow in value, depending on how the rescue plan is run.
Republican leaders who support the administration's plan warned Democrats yesterday to exercise restraint and not slow the bailout package.
But powerful lawmakers in both parties said they would not be rushed into granting Bush's request.
Rep. Henry Waxman, a California Democrat and chairman of the Oversight and Government Reform Committee, said: "The taxpayer is being asked to risk billions to protect the bonuses of investment bankers."
The skepticism was equally palpable at the other end of the ideological spectrum.
"This is going way too fast," said Rep. Mike Pence, an Indiana Republican who said constituents he has encountered were flabbergasted. "The American people don't want Congress to make haste with the financial recovery legislation; they want us to make sense."