Paulson faces GOP lawmakers skeptical of bailout

Treasury Secretary Henry Paulson sought to convince Republicans on Wednesday to support a massive Wall Street bailout plan, but was met with skepticism over the scope and political implications of the measure. 

Inside the Cannon Caucus Room, Paulson met with a tough crowd, according to a source familiar with the discussion. Federal Reserve Chairman Ben Bernanke sat quietly most of the meeting, answering few questions and leaving Paulson to field the inquiries of lawmakers who have been bombarded by constituent calls since the administration’s plan was announced earlier this week.

{mosads}Rep. Zach Wamp (R-Tenn.), who expressed skepticism about the bailout, said until Democrats and Republicans come together — perhaps through presidential nominees Sens. Barack Obama (D-Ill.) and John McCain (R-Ariz.) — there will be no resolution.

“The administration does not have the credibility to convince Main Street,” Wamp said. “Politically it’s like nitroglycerin to [the party] that takes ownership of it.”

However, he added that Wednesday’s meeting convinced him that something needed to be done.

“I am now convinced that there’s a problem that requires a solution. I don’t think we can leave doing nothing,” Wamp said.

GOP leaders said members left with a better understanding of the financial crisis and how the ills of Wall Street could affect their constituents at home.

“I do think there’s more of a discussion of how this is really working out a problem rather than bailing out Wall Street,” said Minority Whip Roy Blunt (R-Mo.). He added that “there was an understanding that the American people won’t tolerate it and the Congress won’t approve some kind of Wall Street bailout that rewards people that have been bad actors in this.”

Rep. John Campbell (R-Calif.), who has urged colleagues to work with Paulson, was optimistic following the meeting.

“I think progress was made today and I think there is understanding of the consequences of not acting,” Campbell said. “I think there is an increased willingness to listen to the proposal, but I don’t think he got any votes in there today.”

At the meeting, in response to a reference to Democratic criticism that the crisis was caused by a failure of the free market, Paulson, according to a source familiar with the meeting, said: “It’s not about too little regulation or deregulation, it's about crappy regulation.”

Financial Services Committee ranking member Spencer Bachus (R-Ala.) said committee Chairman Barney Frank (D-Mass.) was including him in the crafting of a bill that would be an alternative to the Paulson plan.

“We are going to stay here until we come up with a plan. Congress isn’t going home,” Bachus said. But he added that “there needs to be some kind of guarantee that the taxpayers are not going to lose money on this deal.”