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Bailout Talks Break Down

TSC Staff

You can find more stories like this in our On the Brink series.

The Bush administration's $700 billion bailout plan was thrown into disarray late Thursday, after it looked as though a breakthrough on the deal had been reached earlier in the day.

Negotiators broke off talks Thursday evening with no agreement and with plans to reconvene Friday morning, without House Republicans, according to published reports. It was the Republicans' offer of a competing plan late Thursday that derailed a compromise that was taking shape, the Wall Street Journal reports.

Adding urgency to the approval of the bailout plan was the Federal Deposit Insurance Corp.'s seizure of Washington Mutual (WM Quote) and JPMorgan Chase's (JPM Quote) agreement to buy all the deposits, assets and certain liabilities of the failed bank.

Earlier Thursday, congressional leaders had put together the outline of a compromise that involved allotting the bailout money in installments. The outline was widely expected to result in a deal. But an afternoon meeting attended by President Bush, congressional leaders and the two presidential candidates, broke with no agreement, the Journal reports.

One cause of the delay was opposition from House Republicans who have tried to craft an alternative plan that could let banks buy insurance for the troubled assets weighing down their books, instead of using taxpayer money.

Following the White House meeting, Democrats reconvened a small, bipartisan group Thursday evening. As the evening wore on, some senators predicted a bill would pass over the weekend, possibly using a complex congressional procedure such as folding the bailout into an existing spending measure, the Journal reports.