Race is on to bail out bailout plan

House Democrats and the Bush administration also remained far apart on several crucial issues.

For example, Frank wants to give the government the power to cap the compensation of executives of the firms helped by the bailout.

"I just think it is inconceivable . . . that the taxpayer should put money at risk because of bad decisions made by people who would then continue to be rewarded without any restriction," Frank said.

But administration officials said Paulson was "dead set" against a compensation cap, fearing that it would discourage companies from taking advantage of the program.

In addition, Frank wants to make it easier for bankruptcy judges to modify the terms of "nontraditional" mortgages -- such as those that start with low interest rates that later reset to higher ones -- to make them easier for homeowners to afford.

Such a move, which would partially reverse a tightening of bankruptcy rules approved by Congress only two years ago, is adamantly opposed by the lending industry.

Frank and fellow Democrats also want the administration to declare support for a new economic stimulus package atop the $100 billion in tax rebates sent out earlier this year. Such a package, however, would be handled separately from the bailout legislation.

Despite the remaining disagreements, Frank and House Speaker Nancy Pelosi (D-San Francisco) said at a joint appearance that there was substantial progress toward a final bill.

"We've gotten closer to where we think [the bailout plan] ought to be," Frank said. "We're not quite there yet."

"And we're not sending a blank check to Wall Street," Pelosi added.

A senior Treasury Department official said the administration and Frank had engaged in a "constant back-and-forth" since Saturday and were "making good progress."

The latest chapter in the 14-month-long financial crisis began late last week when Paulson and Federal Reserve Chairman Ben S. Bernanke told congressional leaders that efforts to stave off trouble with ad hoc methods had failed and that only a giant government rescue could save the financial system -- and with it, the economy -- from collapse.

Lawmakers got their first peek at what the two men had in mind when Paulson sent legislative language to Capitol Hill on Saturday. The 2 1/2 -page document would have given the Treasury secretary essentially unrestrained power to borrow and spend $700 billion to buy troubled mortgage assets in hopes that such a move would restore confidence in the financial system and enable it to operate normally again.