Many officials, including members of the Bush administration as well as independent economists, have said that excessive deregulation and inadequate government supervision played a substantial role in creating the current crisis. It was not immediately clear how financial firms burdened with billions of dollars in toxic mortgage-backed securities could finance what appeared to be a retroactive insurance program.
Rep. Barney Frank (D-Mass.), chairman of the House Financial Services Committee and a lead negotiator with Treasury Department since the bailout plan was first proposed, said the insurance idea was an eleventh-hour "campaign ploy" designed to give McCain more exposure during the crisis negotiations.
At a Democratic news conference, Frank said Paulson had already deemed the insurance-based approach unworkable.
"Rather than help us negotiate differences, [McCain has] identified with a radically different approach that the secretary of the Treasury has already rejected," Frank charged.
He noted that House Republicans did not bring up their alternative plan when Paulson was testifying before the House on Wednesday. "This notion of an insurance approach was never surfaced," Frank said. "It's an odd way to behave when you have an alternative proposal."
Frank said the negotiators had reached a substantial consensus with the administration.
"The next thing I know, members of the media are saying to me that House Republicans have a very different plan, supported by Sen. McCain and involving insurance," Frank said. "I go to Secretary Paulson and said, 'Did you know this?' He did not."
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richard.simon@latimes.com
maura.reynolds@latimes.com
nicole.gaouette@latimes.com
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Times staff writers Peter G. Gosselin, Bob Drogin, James Gerstenzang and Johanna Neuman contributed to this report.
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(BEGIN TEXT OF INFOBOX)
Bailout: The latest
According to a current draft, the rescue plan would:
Set limits on executive compensation for participating companies.
Minimize risk for taxpayers.
Require that the government be given an equity stake in any participating company.
Install an oversight board that could halt the program.
Require regular, detailed reporting to Congress.
Create an inspector general.
Require Government Accountability Office audits.
Release $700 billion in authorized funds in installments. The first would be $250 billion, then $100 billion. The final $350 billion would require a joint resolution of Congress.
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Source: Times research
