Frank, however, said Democrats and the Bush administration remain far apart on a proposal to give bankruptcy judges more power to adjust mortgage rates and another to limit the pay of executives who sell distressed assets to the government.
Some Senate Democrats are worried about the total cost of the package. Sen. Charles Schumer (D-N.Y.) has proposed splitting it up into $150 billion increments Congress could approve periodically. But Paulson dismissed the suggestion Tuesday as insufficient to instill market confidence.
Senate Majority Leader Harry Reid (D-Nev.) reiterated Tuesday afternoon the importance of giving bankruptcy judges greater flexibility. He noted that judges can readjust mortgage terms if a borrower facing bankruptcy owns multiple homes.
Republicans say they are willing to curb executive compensation but remain inflexible on greater power for bankruptcy judges. One Republican familiar with the talks said the proposal would undermine the sanctity of financial contracts and could also erode the value of the very distressed assets the Treasury Department is proposing to buy.
While House and Bush administration negotiators are spearheading the discussions over the scope and content of the package, its ultimate passage will likely depend on Republican support in the Senate. This was signaled Tuesday by Reid’s plea for Republican votes and Paulson’s unusual effort to meet privately with GOP lawmakers after undergoing several hours of testimony.
Paulson warned GOP lawmakers that the health of the economy was at stake and that if Congress did not pass the bailout within the next week it could destabilize the markets further, said GOP sources in attendance.
Several Republicans who remained unconvinced after the meeting said they need more details about how the administration plans to run the market relief program.
“Are we going to let the stock market going up and down control what we do here?” said Sen. George Voinovich (R-Ohio). “For us to do something [Wednesday] without getting more of the details on it would cause the American people to wonder whether or not we were really doing our work.”
Other Republicans, such as Sen. Wayne Allard (Colo.), question whether the massive program will even work.
Market analysts share those concerns.
“There are two levels of concern,” said Roberts, of ChannelCapitalResearch.com. “On one level the question is whether this thing is going to work.”
Roberts said capital providers also want to know the details of the bailout: “What they’re finding is that it’s all very sketchy.”
J. Taylor Rushing contributed to this article.
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