According to the Washington Post, in a meeting with House Republicans just before the bipartisan Thursday afternoon meeting McCain had arranged at the WH, McCain apparently bought into an ovbviously unworkable "insurance" idea Paulson already had debunked with Ryan the previous day. But Ryan was apparently too stupid or too stubborn to drop it, even though it might require scrapping an effort encompassing a week of all-nighters by many Congresspeople and their staffs, and that already had won agreement from 40 Republican Senators and most Democrats.
High drama ensued in a Republican policy luncheon where McCain dropped a bomb, in a quick Democratic caucus with Paulson in the Roosevelt Room at the White House, and in the meeting with Dubya.
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From
http://www.washingtonpost.com/wp-dyn/content/article/2008/09/26/AR2008092603957_pf.html"How McCain Stirred a Simmering Pot
By Jonathan Weisman Washington Post Staff Writer Saturday, September 27, 2008; A01
When Sen. John McCain made his way to the Capitol office of House Minority Leader John A. Boehner (R-Ohio) just past noon on Thursday, he intended to "just touch gloves" with House Republican leaders, according to one congressional aide, and get ready for the afternoon bailout summit at the White House. Instead, Rep. Paul D. Ryan (Wis.), the ranking Republican on the House Budget Committee, was waiting to give him an earful. ... Ryan said ... the plan had to be fundamentally reworked, relying instead on a new program of mortgage insurance paid not by the taxpayers but by the banking industry. McCain listened, then, with Sen. Lindsey O. Graham (S.C.), he burst into the Senate Republican policy luncheon. Over a Tex-Mex buffet, Sens. Robert F. Bennett (Utah) and Judd Gregg (N.H.) had been explaining the contours of a deal just reached. ...
"I appreciate what you've done here, but I'm not going to sign on to a deal just to sign the deal," McCain told the gathering, according to Graham and confirmed by multiple Senate GOP aides. "Just like Iraq, I'm not afraid to go it alone if I need to." For a moment, as Graham described it, "you could hear a pin drop. It was just unbelievable." Then pandemonium. By the time the meeting broke up, the agreement touted just hours before -- one that Sen. Lamar Alexander (Tenn.), the No. 3 GOP leader, estimated would be supported by more than 40 Senate Republicans -- was in shambles. ...
The Republican Study Committee, an enclave of House conservatives, had already begun turning against the Paulson plan. When McCain announced his return, the conservatives feared he would forge an agreement largely along Paulson's lines, with slight alterations and the GOP leadership's blessing. "No one knew where he was going," one of the aides said. ... On Wednesday afternoon, Boehner appointed a new working group, led by Cantor, Ryan and Republican Study Committee Chairman Jeb Hensarling (R-Tex.), and including some moderates, to see if they could put together an alternative proposal. McCain's impending arrival shifted that effort into high gear. By the time McCain arrived in Boehner's office Thursday, the principles of a new plan were ready. According to Republican aides, McCain was in Boehner's office when the announcement of a deal crossed their BlackBerrys. Rep. Spencer Bachus (Ala.), the House Republicans' representative in the talks, stumbled into the meeting to be
peppered by participants with incredulous questions. ...
It was not a new idea, White House and Treasury officials said. Paulson and Federal Reserve Chairman Ben S. Bernanke had considered a similar option and rejected it. For one thing, asking banks teetering on the edge of bankruptcy to pay into the insurance fund would be like asking a patient facing heart surgery to buy health insurance before being wheeled into the operating room. The banks would be too weak to pay, and the cost of the insurance would be so high, drawing on the fund after a round of mortgage foreclosures would merely be repaying the banks what they had paid in. Besides, one Treasury official said, it would do nothing to address the problem at hand. Banks would have no more money than they do now to lend. And they would still be holding the bad assets that are making it impossible for them to borrow. Paulson made those points Wednesday at a contentious meeting with House Republicans. But Ryan convinced McCain that the idea had to be taken seriously to bring House
Republicans on board. ...
The breakdown was serious enough that word reached Paulson. Just 25 minutes before the scheduled meeting at the White House, Paulson phoned House Speaker Nancy Pelosi (D-Calif.) to alert her to trouble, according to a Senate Democratic leadership aide. When congressional leaders converged on the White House, the Democrats peeled off into the Roosevelt Room to discuss the revolt over the insurance plan. ... It was then that Paulson gingerly walked in to beg, "Don't blow this up, please." The secretary feared that Democrats would throw their hands up and declare the deal dead. The crowd erupted in unison, all barking at Paulson that they were not the problem -- he needed to talk to his own party. Under the barrage, Paulson dropped to one knee, clasped his hands in front of his face as if he were praying and joked: "Please, please, don't blow this up. Give me some time." "Hank," Pelosi replied, "I didn't know you were Catholic."
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