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Congress Eyes Oversight In Wall Street Cleanup

MELISSA BLOCK, host:

If oil markets have the jitters, so do Democrats and the Republicans on Capitol Hill. The Bush administration's proposal to spend $700 billion to buy bad debt sent shudders through many members of Congress. As NPR's David Welna reports from Capitol Hill, the proposal is getting a chilly reception, but negotiations continue.

DAVID WELNA: Lawmakers are keenly aware how many more voters are on Main Street compared to Wall Street, and with a huge election seven weeks away, Congress is clearly siding with Main Street. When members of the House rose today to speak on the bailout, it was a bipartisan chorus of deep skepticism. Here's Oregon Democrat Peter DeFazio railing against Treasury Secretary Paulson.

Representative PETER DEFAZIO (Democrat, Oregon): He insists this has to be done without meaningful discussion or debate or any change by the Congress. Sort of, you know, an immediate authorization for use of financial force. Does this remind anybody of anything? Like the rush into Iraq on election eve a number of years ago.

WELNA: And here is Florida Republican Cliff Stearns calling the bailout an assault on American capitalism.

Representative CLIFF STEARNS (Republican, Florida): The nationalization of private asset is inherently un-American. As free enterprising Americans, we need to let our markets determine the winners and the losers, not the United States Treasury.

WELNA: Stearns was followed by a member of the Financial Services Committee, California Democrat Brad Sherman.

Representative BRAD SHERMAN (Democrat, California; Member, Financial Services Committee): Today, we are asked to approve the greatest power grab any executive has ever asked for. And the greatest transfer of wealth Wall Street could imagine.

WELNA: Indiana Republican Mike Pence, for his part, sent a letter to his GOP colleagues today, urging them to oppose the bailout plan.

Representative MIKE PENCE (Republican, Indiana): We simply cannot increase the national debt by nearly a trillion dollars without expecting the American people's ire, and ultimately without expecting a massive tax increase in the near future.

WELNA: But Secretary Paulson has some strong allies, as well, on Capitol Hill. Barney Frank, the Democrat who chairs the Financial Services Committee, told reporters it makes sense for the U.S. to intervene, both because it can raise the money and because it may not end up being so costly.

Representative BARNEY FRANK (Democrat, Massachusetts; Chairman, Financial Services Committee): It is very likely the case that the market is so depressed now psychologically, that a lot of the value out there is undervalued, that there is more real value that you could realize today. Which means if somebody with very deep pockets could hold that, buy it and hold it, and then not sell it all at once, but sell it in a more controlled fashion, you have a very good chance of breaking even or making a little money. That's why, you know, it's never going to remotely cost anything like 700 billion.

WELNA: Still, Frank says Democrats will be adding several key items to Paulson's proposal. One of them, a strong oversight board, is acceptable to the White House. Two others, using bankruptcy judges to rewrite the terms of distress mortgages and putting curbs on how much executives of bailed out firms are paid, are not. Senate Majority Leader Harry Reid said Congress must still go further.

Senator HARRY REID (Democrat, Nevada; Senate Majority Leader): It's not enough to fund a Wall Street bailout, simply. We need an economic recovery plan to create jobs, provide better unemployment insurance, invest in our crumbling infrastructure. Now, Mr. President, such a plan has to be voted upon before we adjourn, either as part of this legislation or separately.

WELNA: That adjournment, which is slated for Friday, is now likely to come only when the bailout package is finished. David Welna, NPR News, the Capitol. Transcript provided by NPR, Copyright NPR.

NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.

David Welna is NPR's national security correspondent.