Lawmakers playing Deal Or No Deal

Deal Or No Deal was the game on Capitol Hill on Tuesday as the presidential campaign collided with the financial uncertainty and voter fury that is the Wall Street bailout.

Markets rose and Democrats insisted for most of the day they had a tentative agreement on the $700 billion package heading into a White House meeting with Sen. John McCain (Ariz.), the Republican candidate for president, Democratic contender Sen. Barack Obama (Ill.), congressional leaders and President Bush.

{mosads}With fears rising that McCain would swoop in and claim credit for a deal he had nothing to do with, Democrats appeared to drop their fear of taking ownership of the plan and aggressively promoted the deal, as tentative as it was.

House Republicans, however, would have none of it, with House Minority Leader John Boehner (R-Ohio) issuing a bluntly worded statement that “There is no bipartisan deal at this time.”

Republican support is crucial because House Speaker Nancy Pelosi (D-Calif.) and other key Democratic officials have indicated they won’t bring up the bill unless it has the support of a majority of House Republicans.

Rep. Spencer Bachus (Ala.), the ranking Republican on the House Financial Services Committee, was sent to a negotiating session Thursday morning with no authority to negotiate.

At a press conference where senators and House members proclaimed a deal, Bachus stood by and offered no objections.

But later, he issued a statement stressing there wasn’t a deal.

“There was progress on many issues, but no agreement other than to continue discussions,” Bachus said.

Then Bachus had another surprise. He told reporters that he and McCain, who suspended his campaign Thursday to deal with the financial mess, were interested in a whole new way of helping cure Wall Streets ills. McCain, he said, wants to try insurance or loans, rather than purchasing toxic debts.

“We would prefer a loan or supplying insurance,” Bachus told reporters. “These are the ideas Sen. McCain tried to maximize. He feels strongly we have to design a program where taxpayers won’t lose.”

Bachus, wearing a “McCain-Palin” lapel pin, said he’d talked to McCain on Wednesday night and had breakfast with McCain’s advisers Wednesday morning.

Rep. Barney Frank (D-Mass.), the chief negotiator for House Democrats, blamed McCain Thursday night for the impasse.

“John McCain came here to break up the logjam and he wound up creating one,” Frank told the Democratic caucus meeting Thursday night, according to an attendee.

Senate Banking Committee Chairman Chris Dodd (D-Conn.) also accused McCain of playing politics with the negotiating process.

“Political theater doesn’t help,” said Dodd in an interview with CNN.

{mospagebreak}A deal appeared to be in reach after the Bush administration agreed to phase in payments to the troubled financial sector. This allowed Democrats to stamp their imprint on the bill, and smoothed the way for Senate Republicans worried about the size of the package to line up in support.

An “Agreement on Principles” obtained by The Hill indicated that the $700 billion would be doled out in three chunks — $250 billion at first, then another $100 billion when the Treasury secretary certifies it’s needed. The remaining $350 billion would be subject to a joint resolution of disapproval.

For homeowners facing foreclosure, the legislation would require loan modifications for mortgages that wind up being owned by the federal governments. It also establishes an oversight board that could veto the Treasury secretary’s moves. It would require the government to get some ownership stake in any company it bails out, and requires the Treasury to set standards to prevent excessive compensation.

{mosads}Still, that wasn’t enough to bring on many House Republicans.

One GOPer, noting reports that only four Republicans supported the package, said, “that was wrong, but it wasn’t far off.”

Boehner’s office said he has appointed a working group of nine House Republicans to work on a plan to help financial institutions. Three conservative members of that group, Reps. Eric Cantor (R-Va.), Paul Ryan (R-Wis.) and Jeb Hensarling (R-Texas), said they’d developed a set of principles based around a mortgage insurance concept for helping the companies.

They said there was a “logjam” they were seeking to break by bringing up new ideas.

“We remain skeptical, fearful and unconvinced,” about the Bush administration’s plan, Hensarling said.

Democratic aides were furious and suspicious that McCain was trying to slow down negotiations so he could appear to be involved in them.

Pelosi took the rare step of relating a one-on-one phone conversation. She said McCain had called her Wednesday, complaining that nothing was happening and there had been no progress.

“I said, ‘I have good news for you. Much progress is being made. We’d like to keep going,’” Pelosi said. “He thanked me for taking his call.”

{mospagebreak}House Democratic leadership aides sketched out a scenario in which the bailout would pass the House with 218 votes, or something close to it, a bare majority. Vulnerable members from both parties and members of the right and left flanks would be allowed to vote no.

Pelosi acknowledged that many House Democrats are interested in a tax, such as a levy on stock trades, to pay for the bailout. But she indicated that would be debated later, and not included in the package.

“You might make a judgment down the road, that there’s a shift and it should be covered” with a tax increase, Pelosi said.

{mosads}Rep. Peter DeFazio (D-Ore.) was cheered in the Democratic Caucus Thursday morning when he said there should be a tax on stock transactions to pay for the bailout.

“This is a huge screw job by Wall Street,” DeFazio said afterward. “And now they’re holding a gun to our head and saying that it’s our job to remove the bullet before they pull the trigger.”

The idea has been promoted by the Congressional Progressive Caucus, which sent a letter to members on it. But leadership aides said it was unlikely to win the votes of any Progressive Caucus members, so leaders weren’t interested in putting it in.

Despite the murky picture, the Dow Jones average was up 196 points.

“To the extent the market went up today was a relief rally,” said Joseph Brusuelas chief economist at Merk Investments. He said Wall Street sees the risk of Congress not acting or the package disappearing.

J. Taylor Rushing and Jackie Kucinich contributed to this article.