Private talks on Capitol Hill ended at midday with the announcement that an agreement in principle had been reached on a $700 billion financial rescue package that the Bush administration wants. Few details were immediately available.
There were signs that the conservative-leaning House Republican Caucus was not on board. Both of Congress' Republican leaders, Rep. John Boehner and Sen. Mitch McConnell, issued statements saying there was not yet an agreement.
But Banking Chairman Chris Dodd, D-Conn., and Republican Sen. Bob Bennett, among others, said negotiators from Congress and the administration had arrived at a deal that could win approval. Other key lawmakers said that after days of bareknuckles negotiations there was little of note left to resolve.
The early reaction from the White House was positive but cautious. "It's a good sign that progress is being made," White House deputy press secretary Tony Fratto said.
Wall Street showed its pleasure, cautiously. The Dow Jones industrials were up about 200 points near the end of the trading day, though they had been up much more earlier in the day.
Under the tentative plan, the government would buy the toxic, mortgage-based assets of shaky financial institutions in a bid to keep them from going under and setting off a cascade of ruinous events, including wiped-out retirement savings, rising home foreclosures, closed businesses, and lost jobs. Bush warned darkly in a prime-time address Wednesday night, "Our entire economy is in danger."
Debate has been fierce on such questions as whether to phase in the cost and whether to give taxpayers an equity stake in rescued companies. Housing Financial Services Chairman Barney Frank, D-Mass., told The Associated Press both would be included in the legislation.
The Bush administration has made concessions almost daily to demands from the right and the left from its original three-page proposal, including agreeing to limit pay for executives of bailed-out financial institutions.
While lawmakers engaged in nitty-gritty dealmaking, Democrat Barack Obama and Republican John McCain, who have each sought in their own ways to distance themselves from the unpopular Bush, prepared to sit down together with the sitting president at the White House for an hourlong afternoon session apparently without precedent. By also including Congress' Democratic and Republican leaders in the meeting, much of Washington's political power structure was to be gathered at one long table in a small West Wing room.
The White House timed the session to fit the candidates' schedules — and after the stock markets closed for the day.
It was somewhat upstaged nearly three hours before various motorcades deposited the meeting participants and their entourages inside the White House gates, when Capitol Hill leaders reported their deal. Despite the national prominence of Bush, McCain and Obama, none has been deeply involved in this week's scramble to hammer out a package.
The developments on the Hill lent fresh and urgent purpose to the session: providing encouragement — and political cover — for lawmakers of both parties to accept the plan in this highly charged election season.
The bailout plan is expected to come up for votes in the House and Senate quickly, perhaps within days, so that lawmakers can adjourn to campaign for their own re-elections.
"The meeting's purpose is to provide for a discussion among the country's top political leadership where everyone can agree on the urgency of getting something done and on a path to bringing it to conclusion," said White House press secretary Dana Perino.
The pitch by Bush, Obama and McCain was no easy sell.
All lawmakers are returning to home districts packed with constituents angry that they are being asked to foot the bill to bail out Wall Street's rich guys when they and their neighbors are suffering the effects of ballooning mortgages and tightening credit. This means Obama and even the increasingly marginalized Bush could have sway with their joint resolve.
McCain, in particular, was being leaned on by Democrats and fellow Republicans alike to deliver GOP votes, as some conservatives are in open revolt over the astonishing price tag of the proposal and the heavy hand of government that it would place on private markets. Placating them enough to bring them in line could be a tall order for the Republican presidential nominee who has a checkered relationship with the right wing of his party.
A group of GOP lawmakers circulated a less government-focused alternative. Their proposal would have the government provide insurance to companies that agree to hold frozen assets, rather than have the government purchase the assets. Rep Eric Cantor, R-Va., said the idea would be to remove the burden of the bailout from taxpayers and place it, over time, on Wall Street instead.
Layered over the White House meeting was a complicated web of potential political benefits and consequences for both Obama and McCain.
McCain hoped voters would believe that he rose above politics to wade into successful, nitty-gritty dealmaking at a time of urgent crisis, but he risked being seen instead as either overly impulsive or politically craven, or both. Obama saw a chance to appear presidential and fit for duty, but was also caught off guard strategically by McCain's surprising gamble in saying he was suspending his campaigning and asking to delay Friday night's debate to focus on the crisis.
Associated Press writer Julie Hirschfeld Davis contributed to this story.