Weary congressional negotiators worked into the night, joined by Treasury Secretary Henry Paulson in an effort to revive or rework the $700 billion proposal that President Bush said must be quickly approved by Congress to stave off potentially "a long and deep recession."
They gave up after 10 p.m. EDT, more than an hour after the lone House Republican involved, Rep. Spencer Bachus of Alabama, left the room. Democrats blamed the House Republicans for the apparent stalemate. Those conservatives have complained that the plan would be too costly for taxpayers and would be an unacceptable federal intrusion into private business.
Talks were to resume Friday morning on the effort to bail out failing financial institutions and restart the flow of credit that has begun to starve the national economy. The plan's centerpiece still is for the government to buy the toxic, mortgage-based assets of shaky financial institutions in a bid to keep them from going under and setting off a cascade of ruinous events, including wiped-out retirement savings, rising home foreclosures, closed businesses, and lost jobs.
The day's White House summit, bringing together Bush, presidential rivals John McCain and Barack Obama, and top congressional leaders, had been aimed at showing unity in resolving a national financial crisis, but it broke up with conflicts in plain view.
After six days of intensive talks on the unprecedented package proposed by the Bush administration, with Wall Street tottering and presidential politics intruding six weeks before the election, there was more confusion than clarity.
Late Thursday, McCain's campaign issued a statement saying, "the plan that has been put forth by the administration does not enjoy the confidence of the American people as it will not protect the taxpayers and will sacrifice Main Street in favor of Wall Street."
Key Democrats and Republicans had announced they had the outlines of a tentative agreement at midday, just hours before the White House meeting. That accord would have given the Bush administration just a fraction of the money it wanted up front, subjecting half the $700 billion total to a congressional veto.
But conservatives were still in revolt, balking at the astonishing price tag of the proposal and the hand of government that it would place on private markets.
Inside the White House meeting, House Republican leader John Boehner expressed misgivings about the emerging plan and McCain would not commit to supporting it, said people from both parties who were briefed on the exchange. They spoke on condition of anonymity because the session was private.
McCain's campaign statement described the meeting as "a contentious shouting match that did not seek to craft a bipartisan solution."
Sen. Richard Shelby of Alabama, the top Republican on the Senate Banking Committee, emerged from the session to say the announced agreement "is obviously no agreement."
News of the apparent breakthrough helped inspire Wall Street, which recorded a 196-point gain for the Dow Jones industrials. The later breakdown seemed likely to send stocks downward again on Friday.
One group of House GOP lawmakers circulated an alternative that would put much less focus on a government takeover of failing institutions' sour assets. This proposal would have the government provide insurance to companies that agree to hold frozen assets, rather than have the U.S. purchase the assets.
Rep Eric Cantor, R-Va., said the idea would be to remove the burden of the bailout from taxpayers and place it, over time, on Wall Street instead. The price tag of the administration's plan to bail out tottering financial institutions — and the federal intrusion into private business matters — have been major sticking points for many Republican lawmakers.
"I'm feeling somewhat puzzled at this point," said Rep. Barney Frank, D-Mass., the Financial Services Committee chairman who has been leading negotiations with Paulson. "We're closer to a deal among the House Democrats, Senate Democrats, Senate Republicans and the administration. ... We seem further away with the House Republicans."
"Sen. McCain and the president between them ought to be able to get House Republicans back to the table," said Frank.
There is wide agreement the U.S. economy is in peril, with financial institutions going under or near the edge and recession looming along with the resulting layoffs and increased home foreclosures.
There had been hopes for broad agreement, too, on a prescription by now, with a confident White House announcement by the president, McCain, Obama and congressional leaders.
But the best Senate Republican leader Mitch McConnell would say afterward was, "It's clear that more progress is needed and we must continue to work together quickly to protect our economy."
"All of us around the table ... know we've got to get something done as quickly as possible," Bush told reporters, brought in for only the start of the meeting. Obama and McCain were at distant ends of the oval table, not even in each other's sight lines. Bush, playing host in the middle, was flanked by Congress' two Democratic leaders, House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid.
McCain and Obama later said they both still expected an agreement could be reached.
Under the accord announced hours earlier among key lawmakers, the Treasury secretary would get $250 billion immediately and could have an additional $100 billion if he certified it was needed, an approach designed to give lawmakers a stronger hand in controlling the unprecedented rescue. The government would take equity in companies helped by the bailout and put rules in place to limit excessive compensation of their executives, according to a draft of the outline obtained by The Associated Press.
Layered over the White House meeting was a complicated web of potential political benefits and consequences for both Obama and McCain.
McCain hoped voters would believe that he rose above politics to wade into successful, nitty-gritty dealmaking at a time of urgent crisis, but he risked being seen instead as either overly impulsive or politically craven, or both. Obama saw a chance to appear presidential and fit for duty, but was also caught off guard strategically by McCain's surprising gamble in saying he was suspending his campaigning and asking to delay Friday night's debate to focus on the crisis.