Bailout Talks in Disarray

One day after President Bush said the nation's economy is at grave risk, the high-stakes negotiations over the proposed $700 billion bailout of the financial system ended in chaos on Thursday.

Lawmakers bickered over competing counterproposals and hours of meetings between key lawmakers broke down without any progress late into the evening.

A meeting at the White House between President Bush, congressional leaders and the presidential candidates was meant to speed approval of an agreement. Instead, the session revealed deep divisions between Democrats and House Republicans.

As a result, House and Senate leaders and Treasury Secretary Henry Paulson rushed to Capitol Hill at 8 p.m. to try to hash out a deal.

But shortly after 10 p.m., Rep. Barney Frank, D-Mass., the lead House Democrat on the issue who had been in close talks with Paulson for days, accused Republicans of refusing to negotiate.

"At this point, we have absolutely no participation or cooperation from House Republicans," Frank said.

The next step was not clear late Thursday night. One thing seems certain: Lawmakers won't recess for the year on Friday, as originally planned. Instead, if they can't reach a deal in the next 24 hours, they're likely to work through the weekend.

The page many thought they were on
Leading Democrats said they were presented for the first time with the House Republican principles at the White House meeting.

Senate Banking Committee Chairman Christopher Dodd, D-Conn., said the White House meeting was thrown off course when participants were blindsided by a new "core agreement" that emerged in the meeting that not many had seen before.

Earlier in the day, congressional negotiators said they had agreed to a set of principles on revisions to the rescue plan, which calls for the Treasury Department to buy up bad mortgage securities from banks in an effort to get them to lend again.

The proposal, as amended by leaders in both chambers, will help homeowners, curb executive pay packages at participating firms and provide oversight of Treasury's actions, Dodd said in a lunchtime address.

"We've reached a fundamental agreement on a set of principles, one, for taxpayers, which is tremendously important," he said. "We're very confident we can act expeditiously."