The fate of the Bush administration's $700 billon bailout package was thrown into doubt Thursday evening, after congressional leaders left a landmark White House summit on the economy hurling accusations at each other and declaring there was no deal.
Debate over the proposed bailout of the financial industry continued into the night, with congressional Democrats saying they're still working toward an agreement and Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke due to meet with lawmakers.
The summit at the White House, which included Barack Obama and John McCain, was intended to be a consensus-building exercise — one of the final stops on the rocky road to approving the controversial rescue package. Congressional leaders just hours earlier had announced they had reached an agreement in principle on the rescue package.
But as Obama and McCain left, officials and aides who had attended the meeting said the summit ended on a very low note.
"This meeting ended bad — real bad," one source told FOX News. Others described the tone as "angry" and "heated," saying Democrats were upset with House Republicans in particular who would not drop their opposition to the administration's proposal.
"We may have gone backward," another source said.
Some Democratic leaders said as much publicly, laying the blame partly on McCain, whom they accused of destabilizing the talks by calling for the candidates to enter the economic negotiations.
"The next thing we know, he's in a position frankly where he's making it harder to get things done, rather than help us negotiate differences," Rep. Barney Frank, D-Mass., said.
Obama said more work needs to be done to resolve differences, but he didn't see a need for the candidates' direct involvement in negotiations.
"Here’s my observation and I think this may have been confirmed at the meeting today — when you inject presidential politics into delicate negotiations, sometimes it’s not helpful. The cameras change things,” Obama told FOX News. “It's not clear to me that having presidential candidates in a high-profile way in the negotiating process is useful.”
Banking Chairman Chris Dodd, D-Conn., said, "It was a photo op for John McCain. ... It was a rescue plan for John McCain."
Bush called Thursday's emergency meeting with lawmakers the night before, after Sen. McCain announced he was suspending his campaign activities to deal with the rescue package.
Though McCain and Obama exited without making any comments, Republican Sen. Richard Shelby of Alabama emerged from the meeting to declare there was no agreement.
"I don't believe we have an agreement," said the ranking minority member of the Senate Banking Committee. "There's still a lot of different opinions."
The top two Republican leaders in Congress, House Minority Leader John Boehner and Senate Minority Leader Mitch McConnell, issued statements saying there was not yet an agreement.
White House press secretary Dana Perino said after the high-stakes meeting that "there is a clear sense of urgency and agreement on the need to stabilize the financial markets and prevent a massive financial crisis from affecting everybody in America."
But as to the substance of the meeting, she said, "members of the administration and the congressional leaders pledged to continue working together to finalize a bill that will address concerns and solve the problem as soon as possible."
Both McCain and Obama are expected to stay in the Washington, D.C., area Thursday night.
McCain has also requested that the presidential debate scheduled for Friday night be postponed, an option Obama and the debate's organizers have dismissed. Obama still plans to travel to the debate site in Mississippi Friday.
McCain's campaign earlier expressed optimism that negotiations over the financial rescue plan were progressing, but aides still had concerns about the complaints of House Republicans.
Bush said Thursday at the top of the meeting that he hopes to reach a financial bailout agreement with Congress "very shortly," as he greeted Obama and McCain for the summit.
“All of us around the table take this issue very seriously and we know we’ve got to get something done as quickly as possible," Bush said. "And this meeting is an attempt to move the process forward. My hope is that we can reach an agreement very shortly.”
The tentative accord reached earlier in the day would give the Bush administration just a fraction of the $700 billion it had requested up front, according to an outline obtained by FOX News, with half the money subject to a congressional veto.
Under the plan, the Treasury secretary would get $250 billion immediately and could have an additional $100 billion if he certified it was needed. The last $350 billion could be blocked by a vote of Congress under the arrangement, designed to give lawmakers a stronger hand in controlling the unprecedented rescue.
The agreement would also set up standards to prevent excessive executive compensation. It would require most profits to be used to reduce the national debt, and establish an oversight board and require regular status reports to Congress. The measures, however, are subject to change and appeared to be in flux after the close of the White House meeting.
There were lingering concerns Thursday afternoon, especially among House Republicans, about whether the package included enough protection for taxpayers.
Despite the hand-wringing, Dodd and Republican Sen. Bob Bennett, among others, said earlier that negotiators from Congress and the administration had arrived at a deal that could win approval. Other key lawmakers said that after days of bare-knuckles negotiations there was little of note left to resolve.
Wall Street showed its pleasure cautiously. The Dow Jones industrials closed some 196 points higher, though that was down from larger gains earlier in the day.
The plan's centerpiece is for the government to buy the toxic, mortgage-based assets of shaky financial institutions in a bid to keep them from going under and setting off a cascade of ruinous events, including wiped-out retirement savings, rising home foreclosures, closed businesses, and lost jobs.
The Bush administration has made concessions almost daily to demands from the right and the left from its original three-page proposal, including agreeing to limit pay for executives of bailed-out financial institutions and give taxpayers an equity stake in rescued companies.
The White House timed the extraordinary meeting to fit the candidates' schedules — and to convene after the close of stock markets.
It was somewhat upstaged nearly three hours before various motorcades deposited the meeting participants and their entourages, when Capitol Hill leaders reported their deal. Despite the national prominence of Bush, McCain and Obama, none has been deeply involved in this week's scramble to hammer out a package.
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