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The Bush administration's $700 billion plan to
bail out the battered financial services industry has been
sidetracked by harsh Republican Party in-fighting and it's
uncertain how many GOP lawmakers will even take part in Friday's
resumption of closed-door negotiations in Congress.

Even for a party whose president suffers dismal approval
ratings, whose legislative wing lost control of Congress and whose
presidential nominee trails in the polls, Thursday was a remarkably
bad day for Republicans.
      

A White House summit meeting called principally with the purpose
to seal the deal that President Bush has argued is indispensable to
stabilizing frenzied markets and reassuring the nervous American
public descended into arguments - mostly among Republicans.
      The meeting revealed that Bush's proposal to combat the worst
financial crisis in decades had been suddenly sidetracked by fellow
Republicans in the House, who refused to embrace a plan that
appeared close to acceptance by the Senate and most House
Democrats.
      

Treasury Secretary Henry Paulson begged Democratic participants
not to disclose how badly the meeting had gone, dropping to one
knee in a teasing way to make his point according to witnesses.
      

And when Paulson hastily tried to revive talks in a nighttime
meeting near the Senate chamber, the House's top Republican refused
to send a negotiator.
      

"This is the president's own party," said Rep. Barney Frank, a
top Democratic negotiator who attended both meetings. "I don't
think a president has been repudiated so strongly by the
congressional wing of his own party in a long time."
      

By midnight, it was hard to tell who had suffered a worse
evening, Bush or McCain. McCain, eager to shore up his image as a
leader who rises above partisanship, was undercut by a fierce
political squabble within his own party's ranks.
      

The consequences could be worse for Bush, and for millions of
Americans if the impasse sends financial markets tumbling, as some
officials fear. Although talks were resuming Friday, it wasn't
clear how many House Republicans would participate.
      

Republicans and Democrats alike seemed unsure which way McCain
was leaning. His campaign's statement late Thursday shed little
light.
      

"At this moment, the plan that has been put forth by the
administration does not enjoy the confidence of the American
people," it said. It was unclear whether McCain would attend
Friday night's scheduled debate against Democratic nominee Barack
Obama in Oxford, Miss.
      

Ordinarily a Republican president's problems are with Democrats,
especially if they control the House and Senate. In this case, Bush
seemed almost over that hurdle.
      

To be sure, Democrats demanded a number of changes in his $700
billion bailout plan, but administration insiders signaled they
probably were acceptable. They included greater oversight, more
protections for taxpayers, efforts to head off home foreclosures
and piecemeal allocations of the federal money to buy toxic
mortgage securities.
      

What caught some by surprise, either at the White House meeting
or shortly before it, was the sudden momentum behind a dramatically
different plan drafted by House conservatives with Minority Leader
John Boehner's blessing.
      

Instead of the government buying the distressed securities, the
new plan would have banks, financial firms and other investors that
hold such loans pay the Treasury to insure them. Rep. Paul Ryan,
R-Wisc., a chief sponsor, said it was clear that Bush's plan "was
not going to pass the House."
      

But Democrats said the same was true of the conservatives' plan.
It calls for tax cuts and insurance provisions the majority party
will not accept, they said.
      

At one point in the White House meeting, according to two
officials, McCain voiced support for Ryan's criticisms of the
administration's proposal. Frank, a gruff Massachusetts liberal,
angrily demanded to know what plan McCain favored.
      

These officials also said that as tempers flared, Bush struggled
at times to maintain control.
      

At one point, several minutes into the session, Obama said it
was time to hear from McCain. According to a Republican who was
there, "all he said was, 'I support the principles that House
Republicans are fighting for."'
      

Some at the table took that to mean the conservatives'
alternative proposal, which stands little chance of passage.
      

A few hours later, Paulson and the handful of negotiators
wearily headed for home. Frank told The Associated Press: "I did
tell Secretary Paulson that this whole thing is at risk if the
president can't get members of his own party to participate."


Associated Press reporters Julie Hirschfeld Davis and David Espo
contributed to this report.

Gallery

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President Bush's speech on economic crisis

The Bush administration's plan to bail out the battered financial services industry has been
sidetracked by harsh Republican Party in-fighting.

A bad day for the GOP on politics, bailout plan

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