Another 11th-hour Bailout Proposal

A small group of House Republicans who oppose the massive financial-markets bailout plan urged congressional leaders on Wednesday night to scrap the current proposal in favor of a new one granting the Federal Reserve authority to spend $250 billion shoring up the banks.

Hours before the Senate takes up an expanded measure granting historic new authority to the Department of the Treasury, nine House Republicans - including two members of the elected leadership team - sent the top two leaders of each party in both chambers a letter calling the current bill "poorly conceived and unfair to our constituents."

Despite a number of changes that have been made to the initial Treasury proposal, these members argue the fundamental legislation remains what Henry Paulson asked for - authority to spend $700 billion buying up devalued mortgage-related assets that are clogging the economy.

"The Paulson bailout plan must be scrapped," the members write.

Instead, the Federal Reserve could spend $250 billion propping up struggling banks. In exchange, the government would get preferred equity in each institution through warrants on the stock. A number of economists have suggested a similar solution. But this train may have already left the station, if party leaders can corral 12 more votes while holding onto the ones they already have.

The chief authors are California Rep. Devin Nunes, a close confidante of House Minority Leader John A. Boehner (R-Ohio), and Michigan Rep. Thaddeus G. McCotter, a member of the elected leadership. Texas Rep. John Carter, the vice chairman of the Republican Conference, and his predecessor, Georgia Rep. Jack Kingston, have also signed on.