House Minority Leader John A. Boehner (R-Ohio) spoke favorably of the insurance plan Thursday, although on Friday he appeared to be backing away from it, saying, "There are a lot of options."
The apparent contradiction triggered speculation that the current impasse reflected politics more than policy.
"The Republicans want to drag their feet and get some changes so they can say the bill looks better for taxpayers," said Greg Valliere, an independent political strategist for the financial services firm Stanford Group Co. "The key political issue is this: Who wants to take ownership of this thing?"
But with e-mails and calls to Congress running overwhelmingly against the deal, House Republicans said they were working to make sure that ordinary Americans would not be fleeced by a rescue plan widely seen as benefiting Wall Street and not Main Street.
"We believe that America is on the edge of an economic crisis, and we believe that we need to act and need to act quickly," Boehner said. But, he added, "We will not agree to a bill that sells taxpayers out."
The insurance plan has been touted by Republicans as a way to protect taxpayers, although experts were divided over whether it would work.
The lead author of the insurance plan, Rep. Eric Cantor (R-Va.), told MSNBC that the plan would still require the government to buy up the toxic mortgage-related securities that are at the heart of the current crisis.
"As far as the very exotic securities, as far as those that are sliced and diced and very complicated, of course we are not going to be able to assess the risk there. Those are the securities in which we should have the purchase component that Mr. Paulson is talking about," Cantor said.
Paulson said such insurance might help prevent future panics but would not address the current problem. In his initial proposal a week ago, Paulson asked for authority to buy up to $700 billion of Wall Street's unwanted mortgage-related securities.
By removing those assets from the ledgers of banks and other financial institutions, establishing some sort of price for the troubled securities and pumping cash into the panicky system, the administration said its plan would unfreeze credit and spur a resumption of normal financial activity.
Negotiations over the plan went forward all week, and Paulson had accepted an array of modifications designed to ensure outside oversight of the program, protect taxpayers, cap compensation for executives whose firms participated, and dole out the money in three stages instead of all at once.
