Midnight in the Capitol: ‘Finally,’ a deal

updated 9:04 p.m. ET Sept. 28, 2008

WASHINGTON - The government effort to yank control of the sagging economy from Wall Street began to jell a half-hour before midnight Saturday in House Speaker Nancy Pelosi's Capitol office.

Even Republicans credit her for the inspiration: An idea for getting back the $700 billion of taxpayer money that will be on the line in what is shaping up as largest government rescue of an industry in the nation's history.

Pelosi proposed that whoever is president five years from now will have to submit a plan for recouping money from the companies who have been helped by any of the $700 billion not already paid back. Republicans had earlier rejected her suggestion to impose a fee on financial transactions to recover the money, calling it a tax increase.

Seated around the California Democrat's ornate office, the titans of government acquiesced, according to several people present at that pivotal session. They had been on the brink of a resolution before, but this time — less than a day before the first markets half a world away would react to the news — the real deal was almost done.

"Finally," said Sen. Judd Gregg of New Hampshire, the chief Senate Republican negotiator.

The compromise by the California Democrat marked the beginning of the end of the most intense round of policymaking in some very long careers.

As aides on Sunday set about the task of committing the agreement to paper, participants recalled a 10-day blur — by turns depressing and bizarre — that began with President Bush announcing that the economy was on the brink of collapse.

Obama outlines bailout for Main Street President Barack Obama outlined new multibillion-dollar stimulus and jobs proposals, saying the U.S. must continue to "spend our way out of this recession" until more Americans are back at work. Bernanke: Too soon to tell if recovery will last theGrio: Black teens' unemployment rate spikes NYT: U.S. forecasts smaller loss from bank bailout Unexpected drop in jobless rate fuels optimism

In the past month, the government had taken over mortgage giants Fannie Mae and Freddie Mac, the world's largest insurance company and one of the nation's largest banks, Washington Mutual. The fourth largest investment bank, Lehman Brothers, had collapsed and declared bankruptcy.

And now lawmakers were being asked by an unpopular president to bail out what was left of the financial industry by putting taxpayers on the hook for $700 billion five weeks before Election Day.

A revolt by conservative House Republicans was already in the works when negotiators announced Thursday that a deal was imminent, a day after GOP presidential nominee John McCain injected himself and Democratic rival Barack Obama into the debate by calling on Bush to convene a White House summit.

That meeting at the White House turned out to be the low point of the week, devolving into what McCain's campaign called a shouting match.

Treasury Secretary Henry Paulson, getting down on one knee, begged Democrats in the room not to go on camera and reveal how badly it went. They didn't, but their aides were quick to tell reporters all about it.

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