WASHINGTON — Wrangling among the nation’s top political leaders threw the Bush administration’s $700 billion bailout plan into disarray late Thursday, despite a dramatic day of negotiations on Capitol Hill that seemed to promise a deal.
Negotiators broke off talks Thursday night with no agreement and with plans to reconvene in the morning, without House Republicans. It was the Republicans’ surprise championing of a competing plan late Thursday that derailed a carefully crafted compromise previously taking shape.
Also raising the stakes: The demise of Washington Mutual Inc., the largest banking failure in U.S. history, sent a fresh message to Washington of the fragility of the financial system.
In a sign of the extraordinary tension, at one point in the afternoon Treasury Secretary Henry Paulson interrupted a small gathering of Democratic leaders at the White House with a plea for them not to say anything that might blow up the troubled deal, according to three people familiar with the matter. In doing so, the Treasury secretary got down on one knee, a gesture that one of these people described as a moment of levity in a rough day.
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