Congress Nears Historic Vote on $700 Billion Bailout Plan for Wall Street

House Financial Services Committee Chairman Rep. Barney Frank talks with reporters at the U.S. Capitol.

Lawmakers closed in on a massive $700 billion rescue deal for the nation's troubled financial sector even as many lawmakers greeted the proposal with anger and skepticism, criticizing both its substance—a "cash for trash" scheme to buy troubled investments is how one put it—and the warp speed at which they're being expected to act.

In perhaps the most ambitious economic overhaul since the New Deal, the bill would fundamentally redefine the relationship between government and the country's financial sector. Still, Democratic and Republican leaders in both chambers say the huge package could win congressional approval—probably with modifications—as early as week's end.

Lawmakers were said to be nearing a tentative deal with the Bush administration after weekend negotiations that spilled into the wee hours Monday, reportedly lasting until 2:30 a.m. President Bush praised the "good headway" made in hammering out a timely bill, reminding that the "whole world is watching to see if we can act quickly to shore up our markets and prevent damage to our capital markets, businesses, our housing sector, and retirement accounts."

The Treasury Department, the architect of the plan, reportedly agreed to modifications to include mortgage aid and strong congressional oversight in the deal. "But the devil is in the details," a Democrat familiar with the talks said. "The language still has to be drafted."

One key sticking point remains sky-high Wall Street salaries and bonuses. House Democratic Speaker Nancy Pelosi has warned that Congress will not "simply hand over a $700 billion blank check to Wall Street and hope for a better outcome." A top Democratic aide added, "There's a lot of concern this is moving too fast."

On the Republican side, Mike Pence, a conservative House lawmaker from Indiana, on Monday began circulating a "Dear Colleague" letter, urging GOP members to vote "no" on the bailout. He also tried to throw up speed bumps. "Nationalizing every bad mortgage in America is not the answer," Pence wrote to colleagues.

Pence acknowledged the push for fast action but said, "I'm doubtful that the only thing standing between us and a financial panic is for Congress to sign this week, on behalf of the American taxpayer, a $700 billion check over to the Treasury."

House Democrat Peter DeFazio of Oregon had harsh words for the rescue plan from the House floor, raising the specter of the 2002 election-eve vote on use of military force, which gave congressional approval for the war in Iraq. Talking about the unprecedented bailout, he called it "sort of an immediate authorization for use of financial force."

DeFazio took a shot at Treasury Secretary Henry Paulson, the former chairman and CEO of Goldman Sachs. "He is of, by, for, and about Wall Street," the lawmaker said. DeFazio said in a single year, Wall Street bonuses exceeded $60 billion and added: "These people are out of control. They don't understand the real world. For them to talk about Main Street, and that they care about Main Street and student loans and homeowners' equity, is a bunch of B.S."

"We are the last bulwark here, the House of Representatives and the Senate," he concluded. "If this bill were to pass as proposed, we'll do an incredible disservice to the American people."

For Democrats, there have been three key sticking points. They want to curb the "excessive" salaries and bonuses for executives of Wall Street firms that stand to get help from Uncle Sam. They want more relief for average people with troubled mortgages. And they want more congressional oversight than outlined in Paulson's brief proposal—one DeFazio said was so short it amounted to "about $1 billion a word."

A Democratic Senate aide said Monday there's a sense that negotiations will result in a bill acceptable to lawmakers in his party. But he warned there could be defections, especially in the Republican camp.

The House will be first to debate the proposal and vote on it, and then it will be taken up in the Senate. "People are considering all kinds of different things, but in the end, we've got to get this done quickly," a top Senate GOP aide said. "We could have it on Friday."