Congressional negotiators and the Bush administration's top Treasury officials go to work Sunday on settling the final details of a historic $700 billion Wall Street bailout aimed at keeping credit flowing and saving the nation's shaky economy from collapsing into a crippling recession.
"We've made great progress. We have to get it committed to paper so that we can formally agree," House Speaker Nancy Pelosi, D-Calif., told reporters in announcing the tentative deal shortly after midnight Sunday.
Congressional leaders hope to have a House vote on the measure Monday, with a vote in the Senate coming later.
All sides expressed optimism and Senate Majority Leader Harry Reid, D-Nev., said he expected an announcement soon.
"We've still got more to do to finalize it, but I think we're there," said Treasury Secretary Henry Paulson, who participated in the negotiations in the Capitol.
'Worked out everything'
"We worked out everything," said Sen. Judd Gregg, R-N.H., the chief Senate Republican in the talks.
Under the plan, the federal government would purchase mortgage-backed securities and other bad debts held by banks and other investors. The money should help troubled lenders make new loans and keep credit lines open. The government would later try to sell the discounted loan packages at the best possible price.
At the insistence of House Republicans, some of the program's $700 billion would be devoted to a program that would encourage holders of distressed mortgage-backed securities to keep them and buy government insurance to cover defaults.
The legislation would place "reasonable" limits on severance packages for executives of companies that benefit from the rescue plan, said a senior administration official who was authorized to speak only on background.
It also calls for the financial sector to help make up the difference if the government does not recoup its investment in five years, the official said, but details remained unclear.
Also, the government would receive stock warrants in return for the bailout relief, giving taxpayers a chance to share in financial companies' future profits.
Help for homeowners
To help struggling homeowners, the plan would require the government to try renegotiating the bad mortgages it acquires with the aim of lowering borrowers' monthly payments so they can keep their homes.
Despite the changes made during an intense week of negotiations, the heart of the program remains President Bush's original idea: spend billions of taxpayer dollars to buy mortgage-backed securities whose value has plummeted.
It was not immediately clear how many House Republicans might vote for the measure. With the election five weeks away, Democrats have said they would not push a plan that appeared sharply partisan in nature.
Democratic presidential candidate Barack Obama supported the agreement but lay the blame for the crisis on irresponsibility in the financial industry as well as poor government oversight.
"The breakthrough between Congress and the Administration is the culmination of a sorry period in our history, in which reckless speculation and greed on Wall Street and lax oversight from Washington led to a meltdown of our financial markets," he said in a statement.
The agreement was necessary, however, Obama said.
"But regardless of how we got here, a failure to deal with the current crisis would have devastating consequences for our economy, costing millions of Americans their jobs and retirement security," he added.