$700 Billion & Counting

Scrambling for a swift deal on the $700 billion bailout for failing financial firms, key Democrats and Bush administration officials agreed Monday to include mortgage help for beleaguered homeowners but wrangled over other issues including “golden parachutes” for executives who benefit from the unprecedented rescue.

Democrats demanded that the measure limit pay packages for executives of companies helped by the biggest financial rescue since the Great Depression. The administration was balking at that, and also at a proposal by Democrats to let judges rewrite mortgages to lower bankrupt homeowners’ monthly payments.

President Bush prodded Congress during the day to pass the rescue plan quickly, declaring, “The whole world is watching.”

“We do agree we should move quickly,” said Rep. Barney Frank, D-Mass., the Financial Services Committee chairman who was leading negotiations with Treasury Secretary Henry Paulson. “A great deal of progress has already been made,” Frank said.

Congressional aides said the House could act on a bailout bill as early as Wednesday. However, Wall Street wasn’t comforted by the progress of the talks. The Dow Jones industrials plummeted 372 points, oil prices soared $25 a barrel at one point and gold prices surged anew as investors searched for a safe place to park their money. And despite encouraging talk on Capitol Hill, lawmakers on both the right and left were already assailing the deal-in-progress.

The emergency legislation would give the government broad power to buy up devalued assets from troubled financial firms in a bid to unlock the flow of credit and stabilize badly shaken markets in the United States and around the globe.

In one expansion of its original proposal, the administration is asking for broad power to buy up virtually any kind of bad asset — including credit card debt or car loans — from any financial institution in the U.S. or abroad in order to stabilize markets.

Differences remained with the administration on Democrats’ proposal that the government take an ownership stake in the troubled companies it bails out so that taxpayers could benefit from future profits. Frank said Paulson had accepted the idea, but several staff aides at work on the plan said there was no agreement yet on how the concept would work.

Frank said he and Paulson had agreed to create a congressional oversight board as part of the bailout and to mandate that the government come up with a plan to avoid foreclosures on any mortgages it acquires in the rescue. A government official with knowledge of the talks confirmed the administration backs those provisions. As for tottering financial firms, there still were divisions on which would be helped and what kind of assets the government could buy as part of the bailout.