A clearly rattled Congress is scrambling to save the Wall Street with a historic intervention but the Senate Banking Committee chairman is also insisting that foreclosure help for consumers must be included in what may be the largest economic bailout in U.S. history.
Sen. Christopher Dodd (D-Conn.) told reporters Friday morning that "we've got to deal with the foreclosure issue. This plan must include that."
Dodd, asked by Politico what specific foreclosure proposals he is proposing, and would only say he is awaiting details from the Treasury Department on exactly what the Bush administration wants to stem the credit crisis that has paralyzed the U.S. economy.
But Dodd also insisted that the legislation will not become a "Christmas tree" loaded up with all sorts of social spending programs or other economic stimulus ideas. Sen. Judd Gregg (R-N.H.), the ranking Republican on the Budget Committee, told Politico in a phone call Friday morning that if Democrats try to add their $50 billion stimulus legislation, it would "poison the well" on the emergency legislation.
Dodd and other senators on Friday morning would not go into details about exactly what Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke told congressional leaders in an emergency meeting Thursday night, but he added that "I've never been in a more sobering moment in my 28 years" in the Senate.
Dodd says his committee will take the lead in writing the legislation that would give the Treasury the power to establish a credit floor for financial institutions, giving the federal government the authority to take over bad debt that has overwhelmed the country's financial infrastructure.
The legislation will be written over the weekend and may pass both chambers of Congress next week, barring any obstacles. Paulson, Bernanke and Securities Exchange Commission Chairman Christopher Cox will all appear before the Banking Committee on Tuesday.
So far, even though there are a handful of disgruntled conservatives who are unhappy with a major government intervention, nobody is predicting a filibuster when this legislation hits the Senate. Furthermore, senators in both parties warned Friday that the alternative was grim.
"The question is what's the alternative?" said Sen. Charles Schumer (D-N.Y.). "The picture they painted was deeply troubling."
While senators involved in last night's meeting would not go into details, congressional staff familiar with the meeting said they were warned of runs on banks, wiped out money market funds and more failures of financial institutions.
Dodd was flanked this morning at a press conference by a half dozen members of the Banking Committee from both parties, but speaking to reporters after the press conference, he did have time to joke just a bit.
"I've gotten to the point where I didn't want to answer the phone at 4:30 on Fridays because it was usually Hank Paulson" calling about another financial meltdown, Dodd said.