Bush, Paulson Intensify Lobbying to Salvage Bank Rescue Plan

Oct. 1 (Bloomberg) — The Bush administration is stepping up private pressure on Congress to accomplish what its public appeals could not: passage of a $700 billion bank rescue.

Treasury Secretary Henry Paulson spent the past day and a half on the phones and face-to-face with lawmakers and lobbyists, trying to change minds after the House of Representatives rejected the plan. Other White House aides intensified the lobbying campaign after the stock market plunged in the hours after the vote failed, only to recoup much of the losses yesterday.

“The White House is now engaged much more aggressively than it has been and I welcome that,” said Senate Banking Committee Chairman Christopher Dodd, a Connecticut Democrat.

Republicans and Democrats alike have complained that President George W. Bush‘s public appeals haven’t made any difference; the president yesterday made another television plea. Moreover, they said that Paulson hasn’t adequately sold the plan to average Americans.

Yesterday, Paulson stayed out of the public limelight while privately working for support. He spent 40 minutes on a conference call with the 100-member board of the Independent Community Bankers of America, said Camden Fine, the group’s president. Treasury staff offered the group access to Paulson at about 7 a.m. By the afternoon, bankers had gathered to listen to his pitch and ask questions.

Main Street Appeal

“He reviewed why the rescue package was critical to mainstream America and community bankers as it was to Wall Street, and then spent some time making the connection between Wall Street and Main Street,” Fine said.

“You will have thousands, and I’m confident about that, thousands of bank presidents and bank officers from community banks throughout the nation reaching out to their communities to explain the importance of this bill,” Fine said.

Paulson also participated in a call with the American Bankers Association. Other industry groups got similar attention from the administration.

“We’re knocking on all the doors and pulling out all the stops and doing what we can to get this thing passed,” said Hank Cox, vice president of media relations at the National Association of Manufacturers, a Washington trade group.

Cox said his group is in direct contact with the White House about the bill.

`Immediate’ Action

Bush has tried since the rescue’s inception to convince the public it’s necessary. He gave a 13-minute prime-time address on Sept. 25, saying markets needed intervention to avert a “long and painful” recession. “Without immediate action by Congress, America could slip into a financial panic, and a distressing scenario would unfold,” Bush said.

Americans oppose government rescues of ailing financial companies by a decisive margin, and blame Wall Street and Bush for the credit crisis, according to the latest Bloomberg/Los Angeles Times poll.

By a margin of 55 percent to 31 percent, Americans say it’s not the government’s responsibility to bail out private companies with taxpayer dollars, even if their collapse could damage the economy, the Sept. 19-22 survey of 1,428 adults nationwide showed.

This was before the House surprisingly rejected the plan and stocks plummeted, causing public opinion to shift toward approval of intervention. The Standard & Poor’s 500 Index rose 58.35 points to 1,164.74 yesterday, recouping more than half of the previous day’s 8.8 percent plunge.

Paulson’s Role

After his address yesterday, the president made calls from his private study and conferred with Paulson, Federal Reserve Chairman Ben S. Bernanke, federal regulators and senior economic aides. He discussed the bailout with presidential candidates John McCain and Barack Obama, who offered support for the package and suggestions.

One difficulty for the administration has been that Paulson, Bush’s chief economic adviser, has struggled to sell the bill to voters, said Senator John Kerry, a Massachusetts Democrat.

“Frankly, Mr. Paulson has not been a particularly effective advocate,” Kerry, the 2004 Democratic presidential nominee, said in Boston. “He doesn’t seem to connect the dots for people about what this really means on Main Street.”

Even some members of Paulson’s own party expressed dissatisfaction with his salesmanship. “Paulson and the administration failed in two key ways: They failed in presentation and they failed in substance,” said Representative John Shadegg, a Republican from Arizona, who opposed the rescue legislation.

Bolten’s Visit

Meanwhile, other White House and Treasury officials pleaded the administration’s case, and White House Chief of Staff Josh Bolten made an evening visit Sept. 29 to the Capitol.

David McCormick, the Treasury’s undersecretary for international affairs, told Bloomberg Television yesterday that Paulson and his staff know they need to do more persuading.

The goal is to reverse the bill’s 228-205 defeat in the House.

“This is not about Wall Street versus Main Street, this is about the U.S. economy and that affects everybody,” McCormick said. “We need to make that case, we need to make it more strongly every day, and we’re certainly trying to do that.”

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