U.S. bailout deal proves elusive

But one of the GOP negotiators, Rep. Spencer Bachus of Alabama, later sounded what turned out to be a prophetic note. "There was progress on many issues, but no agreement other than to continue discussions," he said, adding, "As I made clear in the meeting this morning, I was not authorized by my colleagues to make any agreement on behalf of House Republicans."

Almost immediately, House Minority Leader John A. Boehner (R-Ohio) made the GOP position explicit: "House Republicans have not agreed to any plan at this point," he said in a statement.

Instead of facilitating an agreement, President Bush's afternoon summit ended in disappointment. Sen. Richard C. Shelby (R-Ala.), the top Republican on the Senate Banking Committee, who has said he opposes the administration plan, walked out of the meeting about 40 minutes after it began, saying, "We haven't gotten an agreement. There's still a lot of different opinions."

Shelby said he had told the president that he didn't think there had been enough study of alternatives. "I brought it up in there," Shelby said. "I'm probably not welcome again."

In a dramatic moment described by a Democratic aide, Paulson took several Democrats aside as participants were leaving and asked House Speaker Nancy Pelosi (D-San Francisco) in particular "not to blow this up."

Pelosi retorted angrily that it was House Republicans who were putting the brakes on the plan, according to the aide, who asked not to be named because he was not authorized to discuss the meeting. As the aide described it, Paulson then dropped to one knee and repeated his appeal.

Pelosi again blamed Republicans for holding up a deal.

"I know, I know," Paulson was said to have replied.

Even as the White House meeting was underway, a group of conservative House Republicans began pushing a drastically different approach. Their idea, they said, was to get Wall Street firms to pony up funds for an insurance program to bail out their less-solvent siblings by creating a kind of insurance program for investment banks like the one for commercial banks.

In addition, the present liquidity crisis could be resolved, according to the proposal, by further deregulation, temporary tax breaks and relaxation of other rules to encourage investors to put more money into the financial system instead of using government funds.

"It makes Wall Street pay for its own bailout," Rep. Paul D. Ryan (R-Wis.) said in a news conference. Ryan and other proponents said the idea had been in the works for days.