WASHINGTON — In a roller-coaster day of hopes raised and hopes dashed, efforts to negotiate a compromise on the $700-billion plan for rescuing the nation's financial system bogged down Thursday, with conservative Republicans denouncing the strategy as ill-conceived and Democrats accusing GOP presidential candidate John McCain of encouraging the revolt.
What remained unclear was whether Thursday's breakdown marked the beginning of the end for the rescue effort, or merely a tumultuous interlude on the way to approving a federal bailout that many in Congress consider unpalatable but unavoidable.
There were signs that, behind the scenes, skeptical Democrats and Republicans were beginning to move toward a compromise version of Treasury Secretary Henry M. Paulson's original plan, but it remained to be seen whether there would be enough votes to pass legislation.
"I'm seeing both Republicans and Democrats start to move toward voting for it," Rep. John Campbell (R-Irvine) said. "I can't tell you that there's a majority at this point, but there's movement."
The working proposal contained most of the features that critics of the administration's original plan had been demanding: limits on compensation for executives of companies that take part in the bailout, a provision for taxpayers to share in any profits from the sale of distressed assets, and payout of the $700 billion in three stages instead of one. The final $350-billion tranche would require a congressional vote.
Republicans, meanwhile, denied that McCain had put obstacles in the way of a deal.
"Focus on a deal that's real," said Sen. Lindsey Graham (R-S.C.), a close McCain ally. "Don't focus on a phony deal and blame John McCain."
Late Thursday, Democrats and Republicans from both houses of Congress, joined by Paulson, returned to the bargaining table in another unsuccessful attempt to craft a proposal that could command majority support. Democratic leaders said they would resume Friday morning without Paulson, but they contended that no deal was possible without at least some House Republican support.
In an assessment echoed by many of his colleagues in both parties, Rep. Howard P. "Buck" McKeon (R-Santa Clarita), an early skeptic who is now convinced that Congress must act, said, "We've got 40 days until an election. You've got a lot of nervous people here. Some of them are totally consumed by the policy. More of them are totally consumed by the politics."
With financial markets continuing to remain calm, members of Congress in both parties apparently concluded that there was still time. Some suggested that the new deadline was sometime Sunday, before Asian financial markets opened.
"Whatever is going to be done has to be done this weekend," said Rep. Lee Terry (R-Neb.), who supports congressional action. "Allowing it to go beyond Sunday into Monday will devastate the markets."
With issues as complex and politically explosive as the Wall Street bailout, it is not unusual for Congress to delay action until the last minute. Many members said more time was needed for constituents to understand the rescue plan and get beyond their anger at using tax dollars to bail out financiers who helped bring on the crisis.
Some Democrats accused McCain of getting behind a plan put forward Thursday by conservative House members. "John McCain did not attack any proposal or endorse any plan," said his spokesman, Brian Rogers.
In an interview with ABC News, McCain said he was hopeful that a compromise could be struck. Pointing to the opposition among House Republicans, he said, "There never was a deal," contradicting what leading congressional negotiators had said earlier in the day.
Rep. Mike Pence (R-Ind.), however, said McCain's involvement in negotiations gave fiscal conservatives hope that any eventual compromise would be more to their liking.
"Knowing John McCain to be the fiscal conservative he is makes many conservatives breathe a lot easier to know he's at the negotiating table," Pence said. "The core of the president's proposal is unacceptable."
McCain met with House conservatives before a White House session Thursday attended by congressional leaders of both parties, McCain and Democratic presidential challenger Barack Obama.
Obama, who earlier in the week had voiced concerns that the presidential hopefuls would be a distraction to the negotiations, expressed support for the ongoing negotiations after the White House summit. "My impression from the meeting today is that the president and the secretary of the Treasury . . . still have some work to do" in getting House Republicans to agree to the proposed bailout.
The seesaw series of events began late Thursday morning, when key congressional negotiators from both parties announced the outlines of a compromise. "We've reached a fundamental agreement on a set of principles," said a triumphant Sen. Christopher J. Dodd (D-Conn.). "We're very confident that we can act expeditiously."