Senate Dems, GOP draw battle lines on bailout

The Democratic and Republican Senate leaders on Monday indicated where the battle lines would be drawn on a massive bill aimed to fix the crisis on Wall Street. 

In dueling floor speeches, Minority Leader Mitch McConnell (R-Ky.) called for immediate passage and Majority Leader Harry Reid (D-Nev.) resisted “rubber stamp” approval of the measure.

{mosads}The positioning came as Democrats began the week calling for a broader bill that includes greater oversight, help for homeowners and a crackdown on excessive compensation for CEOs of failed companies. Both Reid and House Speaker Nancy Pelosi (D-Calif.) warned the White House not to expect “a blank check.”

Over the weekend, Treasury Secretary Henry Paulson began rolling out the administration’s $700 billion plan to buy up troubled assets, thereby walling Wall Street off from excessive risk. Paulson also spoke out on Sunday’s TV talk shows — reiterated with a statement by President Bush — to ask Congress for a “clean” bill that is not loaded down with additions.

Reid said Democrats understand the gravity of the situation and are prepared to act swiftly, but will scrutinize the administration’s proposal.      

“We will not let haste abandon good judgment,” Reid said.

McConnell compared the country’s economic crisis to a house fire that needs to be extinguished. He saluted the “straightforward, four-page rescue plan” put forward by Paulson and said it was the only alternative to the “potentially devastating effects of a meltdown.”

“The final cost of the plan is unclear, but the potential consequences of inaction are not,” McConnell said. “Surely we can all agree to work with each other and stand up for the American people instead of using the bill as flypaper for partisan add-ons.”

McConnell said Republicans have resisted the chance to use the crisis to push tax cuts. However, he acknowledged that GOP senators “have many serious questions about this plan.”

Paulson, Federal Reserve Chairman Ben Bernanke and Securities and Exchange Commission Chairman Chris Cox are scheduled to testify before the Senate Banking Committee on Tuesday. Paulson and Bernanke will also appear before the House Financial Services Committee on Wednesday.