Deal said to be near on big financial bailout plan

House Speaker Nancy Pelosi voiced hope Thursday that a White House accommodation with congressional leaders on protections for taxpayers will help speed agreement on a bill to stabilize distressed financial markets.

Pelosi spoke to reporters as Democratic and Republican negotiators worked in a closed-door meeting on Capitol Hill to nail down the outline of an agreement by the end of the day. The pace of developments was quickening in advance of a highly-anticipated meeting that President Bush will hold with leading lawmakers and presidential nominees John McCain and Barack Obama later in the day.

Bush told the nation in a televised address Wednesday night that passage of the $700 billion bailout package his administration has proposed is urgently needed to calm the markets and restore confidence in the reeling financial system. And his top spokeswoman, Dana Perino, said Thursday she thought "significant progress" was being made.

Financial markets were mixed in early trading; the Dow Jones industrial average rose more than 200 points on optimism about the deal but a credit market squeeze remained as doubts about the proposed plan's effectiveness drove demand for short-term, safe-haven assets.

Pelosi, D-Calif., said that Bush's agreement with Democrats on limiting pay for executives of bailed out financial institutions and giving taxpayers an equity stake in the companies is evidence of progress.

She also said that McCain, R-Ariz., had called her and that she'd told him that talks were headed in the right direction.

At the White House, Perino told reporters that lawmakers can "hopefully close on a framework where we can get this legislation passed."

Senior lawmakers and the administration were still wrangling over major elements of the relief bill, including how to phase in the eye-popping cost — a measure demanded by Democrats and some Republicans who want stronger congressional control over the bailout — without spooking markets. A plan to let the government take an ownership stake in troubled companies as part of the rescue, rather than just buying bad debt, also was under intense negotiation.

The core of the plan envisions the government buying up sour assets of shaky financial firms in a bid to keep them from going under and to stave off a potentially severe recession.

Even as political figures haggled over the shape and price of the bailout, new economic indicators showed that orders for big-ticket manufactured goods plunged in August by the largest amount in seven months and that new applications for unemployment benefits were at their highest level in seven years.

And new home sales tumbled in August to the slowest pace in 17 years, while the average sales price fell by the largest amount on record. It served to further dramatize the problem that Washington is trying to solve.

Bush acknowledged Wednesday night that the bailout would be a "tough vote" for lawmakers. But he said failing to approve it would risk dire consequences for the economy and most Americans.

"Without immediate action by Congress, America could slip into a financial panic, and a distressing scenario would unfold," Bush said as he worked to resurrect the unpopular bailout package. "Our entire economy is in danger."

Bush's warning came soon after he invited Obama and McCain, one of whom will inherit the economic mess in four months, as well as key congressional leaders to a White House meeting Thursday to work on a compromise.

With the administration's original proposal considered dead in Congress, House leaders said they were making progress toward revised legislation that could be approved.

Rep. Barney Frank, D-Mass., who has led negotiations with Treasury Secretary Henry Paulson on the package, said that given the progress of the talks, the White House meeting was a distraction.

"We're going to have to interrupt a negotiating session tomorrow between the Democrats and Republicans on a bill where I think we are getting pretty close, and troop down to the White House for their photo op," said Frank, the House Financial Services Committee chairman. "I wish they'd checked with us."

Paulson and Federal