Not So Fast on the Deal, House GOP Says Make Wall Street Pay

House Republicans, who've been swamped with your phone calls demanding that they reject President George Bush's historically huge $700 billion bailout of Wall Street and bad mortgage bankers, have come up with another idea: Instead of just buying the worthless mortgages, make the banks buy insurance from Washington, which would pay on those that default. It's a plan offered by House Minority Whip Eric Cantor, who's trying to come up with an alternative under orders from House Minority Leader John Boehner. Sources say his idea is a simple one, and one Treasury initially liked but rejected because just buying the bad paper was easier. The emerging plan would act just like the mortgage giant Ginnie Mae, which guarantees loans to poor buyers. It's different from the Bush-Paulson plan in that it doesn't require an upfront, tax-payer-funded kitty of $700 billion. Instead, companies with bad loans would buy insurance from the feds and the feds would turn around and sell the bad loans they end up getting stuck with. The expected result: The Treasury isn't out a ton of money upfront and is only on the hook for bad loans. And if past patterns prove true in the future, Uncle Sam could turn the bad loans into a profit.

"Our objective," said a key House GOP leader working the deal, "is we shouldn't burden the taxpayers, the people who have been living by the rules." The document, provided to Whispers, shows their major principles.

The reason for the alternative plan is simple: House members are receiving calls at a rate of 100 to 4 against the Bush-Paulson bailout. "People are angry."

House leaders said that Treasury looked at the insurance idea and initially liked it but then went for the easier fix: Just buy bad loans. House Republicans, however, have balked at that plan, hence Boehner's call to Cantor to drum up a new idea. Insiders say that the insurance plan isn't exactly an alternative to the Bush-Paulson plan because Paulson's blueprint is written so broadly that the insurance proposals could be folded into the larger plan, leaving it up to Treasury to figure out which program to apply to each bad loan.

Will the GOP get its say? Nobody knows, and they don't think a final deal will come before Sunday. But a GOP source said that House Speaker Nancy Pelosi doesn't want her side holding the bag, so she's demanding that any final bill be supported by a majority of House Republicans.