Cantor Retreat May Unclog Deal Talks
While one key House Republican sent an ultimatum this morning, another offered a critical olive branch that could provide the political support for what some are calling a "hybrid" bailout deal.
Rep. Eric Cantor (R-Va.), the lead author of an alternative GOP proposal, said minutes ago that he's willing to give Treasury Secretary Hank Paulson some authority to purchase the most troubled securities linked to failing mortgages -- a softening of the position he and other renegade Republicans outlined in unveiling their proposal yesterday.
Cantor acknowledged today in comments to The Post that some of the "exotic sliced and diced" mortgage-backed securities are of such little value -- because the underlying mortgages are already deep in foreclosure -- that using his preferred approach of federally insuring them is pointless.
"So you've got to go with Paulson's model," Cantor said, endorsing the federal purchase of those securities to clean up the books for financial firms in distress.
In exchange, Cantor said he is seeking some sort of assurance that the Treasury secretary would also be allowed to create Cantor's insurance program -- similar to that of Fannie Mae and Freddie Mac -- on the other mortgages, charging premiums to the firms holding securities tied to those mortgages.
Cantor's compromise could provide the outline for how a final deal would take shape, as House Speaker Nancy Pelosi (D-Calif.) indicated that the legislation being crafted may already give Treasury such authority. "I don't think there's anything in the bill that prohibits that authority," she told The Post.
Cantor joined House Republicans for a lunchtime meeting that could prove pivotal to the bailout talks, as his political mentor, Rep. Roy Blunt (R-Mo.), minority whip, took over as the lead House Republican negotiator.
Meanwhile, House Minority Leader John Boeher (R-Ohio) sent Pelosi a letter issuing her an ultimatum saying the Cantor insurance proposal must be considered or else the deal falls apart.
"I ask you and your Democratic colleagues to give the House Republican working group's proposals serious consideration as this process moves forward. If such consideration is not given, a large majority of Republicans cannot -- and will not -- support Sec. Paulson's plan," Boehner wrote.
-- Paul Kane
September 26, 2008; 1:05 PM ET
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