Finance counsels

Congressional Democrats clashed with Treasury Secretary Henry Paulson over whether the $700 billion rescue plan for U.S. financial companies should curb executive pay, setting the stage for a fight on the legislation.

U.S. Representative Barney Frank, the chairman of the House Financial Services Committee, said it would be a “grave mistake” not to include limits on the compensation of executives whose companies benefit from the plan. Paulson called such a measure “punitive.”

“We need this to be clean and quick and we need to get it in place,” Paulson said on “Fox News Sunday.” Paulson signaled a willingness to compromise on Democrats’ demands that the measure help people avoid foreclosures.

President George W. Bush and Paulson have said the legislation must pass promptly to ease a financial crisis, and the disagreement over its provisions may complicate or delay a measure that would be the most far-reaching federal intrusion into markets since the Great Depression.

Paulson is asking Congress for unhindered authority to buy devalued mortgage-related securities from investment firms in an effort to keep the financial system from coming to a standstill. The proposal would prevent courts from reviewing the Treasury’s actions while raising the nation’s debt ceiling to $11.315 trillion from $10.615 trillion.

Oversight

Democrats said today that they understand Paulson’s demand for passage of a bill that is not weighed down with a myriad of proposals. Still, they insisted that oversight and other provisions be added.

“We have a difference on what is clean,” Frank said on “Face the Nation.”

The legislation Congress will consider this week must include provisions to help homeowners avoid foreclosure and it “needs accountability,” Senator Charles Schumer, a New York Democrat, said on “Fox News Sunday.” “It needs changes.”

Paulson said that while the bill could include “mortgage relief components,” he suggested that the administration’s plan would already address the issue no fax payday loans. He also noted that “the vast majority of foreclosures in this country — as regrettable as they are and as painful as they are — are coming from people who either don’t want to stay in their home and live up to their obligations or those that never had the financial capability to stay in their home.”

Bogged Down

Republicans warned of dire consequences if the proposal becomes bogged down in partisan politics. “This could be the most serious financial crisis the world has ever dealt with,” said House Minority Leader John Boehner, a Republican from Ohio, said on ABC’s “This Week.”

U.S. Senator Jon Kyl, an Arizona Republican, did not rule out congressional actions on executive pay and homeowner protections in the future.

“First let’s put the fire out and then we can go deal with our favorite solutions to these problems,” Kyl said today on “Fox News Sunday.”

House Speaker Nancy Pelosi of California and Schumer promised to act on the plan by end of this week.

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