In addition, a number of Democrats said they would support the measure only with certain changes -- chief among them a provision to keep Wall Street executives from personally profiting from their firms' participation in the bailout, and a way for the government to share in the profits of Wall Street firms that benefit.
Treasury Secretary Henry M. Paulson initially opposed capping executive compensation in participating firms because he said those provisions could reduce the plan's chances of success. But he told the House Financial Services Committee on Wednesday: "The American people are angry about executive compensation and rightfully so. We must find a way to address this in the legislation."
At issue is a plan devised by Paulson to borrow as much as $700 billion to buy up troubled mortgage-backed securities to get them off the books of financial institutions, allowing those firms to resume their normal roles in the economy.
Paulson, Federal Reserve Chairman Ben S. Bernanke and now the president contend that only by taking such an audacious step can the country put a quick end to the 14-month-old financial crisis and save the economy from a serious recession. Moreover, they say, if all goes as planned and the financial system stabilizes, the government would get back all or most of its money, although the $700 billion would be in addition to potentially hundreds of billions that Washington committed earlier in the crisis.
Wholehearted endorsement of massive government intervention represents a startling about-face for a president who has insisted throughout his career that such meddling creates problems instead of fixing them. In his address, Bush acknowledged the turnabout.
"I'm a strong believer in free enterprise, so my natural instinct is to oppose government intervention," he told viewers. "I believe companies that make bad decisions should be allowed to go out of business. . . . But these are not normal times."
Paulson, who underwent a second day of rough treatment defending the plan on Capitol Hill, found himself in the awkward position of finding Democratic leaders more receptive to working out an agreement than members of his own Republican Party.
The secretary indicated that he was ready to give ground on some facets of the plan, so long as it preserved the core principle of federal action to soak up the loss-ridden mortgage-backed securities that threaten to paralyze the financial system and thus damage the whole economy.
