Lawmakers said early Sunday that they have "made great progress" on legislation that would give the Treasury Department the authority to spend up to $700 billion to purchase illiquid assets and that their staffs would be working through the night to get a deal done this weekend.
Just after midnight, House Speaker Nancy Pelosi, D-Calif., said an agreement in principle had been reached on a number of issues, including forbearance on foreclosures and limits on executive compensation, but that nothing had been "committed to paper."
The announcement came after several hours of fractured negotiations between lawmakers, mostly House and Senate Democrats, and Treasury Secretary Henry Paulson.
Throughout the evening, lawmakers and staffers scurried back and forth between the offices of Rep. Pelosi and House Republican Leader John Boehner of Ohio, telling reporters that "progress" was being made but offering few clues on the legislation's language.
The atmosphere behind closed doors was tense, according to participants, as pressure mounted on lawmakers to get a deal done before the Asian stock markets open at 6 p.m. Sunday.
Discussions were at times heated, they said, bogged down in part by the number of lawmakers involved. At one point Congressional staffers were forced to stash Blackberries and cell phones in a trash can to ensure that details did not leak to the press.
Specifics of the agreement were still sketchy early Sunday morning, but Sen. Kent Conrad, D-N.D., the Senate Budget Chairman, told reporters late Saturday that defining parameters on compensation for executives whose firms sell assets to the government had been one of the toughest issues to resolve. Financial services industry lobbyists have said that a provision limiting executive pay could discourage financial institutions from participating in the program.
The bill is also expected to give Treasury the authority to take equity stakes in firms it assists; direct Treasury and other regulators to minimize foreclosures through systemic loan modifications; and offer tax relief to banks whose capital levels have been hit hard by impairment charges on their investments in Fannie Mae and Freddie Mac preferred stock. The shares have lost much of their value since the government took over the mortgage giants earlier this month.
In a nod to Republicans, the bill is also expected to give Treasury leeway in establishing an insurance mechanism for mortgage-backed securities.
Sen. Conrad said lawmakers are also looking for assurance that the government will recoup its costs if the Treasury plan to purchase illiquid assets fails to return profits to the government after five years. One idea being floated is assessing companies that benefited from the plan.
Rep. Rahm Emanuel, an Illinois Democrat and one of the House's key negotiators, said that the House could vote on the plan Monday.
In the Senate, one of the most vocal opponents, Sen. Jim Bunning, R-Ky., said late Saturday that passage of the bill was a matter of "when not if."
He said that despite his opposition, he had no plans to stage a filibuster.
"You have to play games you think you can win," said Rep. Bunning, a former Major League pitcher and a member of baseball's Hall of Fame. "At best I could slow this down. I can't stop it," he said.