"My colleagues are much happier with this bill now," said Rep. James T. Walsh (R-N.Y.). "The insurance proposal is very popular."
But while the compromise requires Paulson to set up such an insurance program, it goes out of its way to avoid requiring him to use it, saying only that the Treasury secretary "may develop guarantees of troubled assets and the associated premiums."
Treasury officials and many independent analysts have expressed deep skepticism that the insurance program could save Washington any money unless it set a price for coverage that was so high no one could afford it. "Normally you buy insurance before something bad happens," said Brookings Institution economist Douglas Elmendorf. "You can't really buy afterward."
House and Senate Democrats will likely see some of their own most cherished provisions treated much like the insurance measure -- with Paulson deciding how to handle them.
For example, while Democratic lawmakers declared that the final bill would ban companies selling troubled assets to the government from giving their executives multimillion-dollar salaries and "golden parachute" severance packages, Treasury officials briefing reporters on background late Sunday said the actual provisions were extraordinarily narrow.
The ban would generally apply only to severance packages, not salaries, and then only to packages negotiated in the future, not ones already in place. In addition, the bans would only affect companies that sell large blocks of assets to Washington, and only when the executive is fired or the company had gone bust.
"We want to encourage all institutions, including healthy institutions, to participate" in the program, said one of the Treasury briefers. "We're not abrogating existing [compensation] contracts."
A similar fate almost certainly awaits Democrat-drafted provisions to have the Treasury help financially stretched homeowners by jawboning mortgage servicers into renegotiating their mortgages.
The measure requires Paulson to "maximize assistance for homeowners . . . and minimize foreclosures." But in the very same sentence, it says the Treasury has to make sure that taxpayers are not stuck with any additional costs, which makes any substantial additional aid to homeowners unlikely.
Even before unveiling the original plan, Paulson exercised sweeping influence over the nation's mortgage market, having orchestrated the government's Sept. 7 seizure of Fannie Mae and Freddie Mac, which between them owned or guaranteed nearly half of the mortgages in the U.S.
