By Justin Hyde • Free Press Washington Staff • September 25, 2008

WASHINGTON – Congressional leaders from both political parties said today they had agreed to the outlines of a proposed $700 billion bailout of U.S. financial markets, with limits on executive pay and help for homeowners in distress.

The agreement came a few hours ahead of a meeting called by President George W. Bush with House and Senate leaders, along with presidential candidates John McCain and Barack Obama this afternoon.

Lawmakers said many of the final details were still being hammered out, and that the deal still needed input from the Bush administration, but that the map for the largest government move in the U.S. financial system since the Great Depression had been drawn.

“We are prepared to act expeditiously on a plan with our colleagues that will allow us to send a very strong message to the markets,” said Sen. Christopher Dodd, D-Conn.

The Dow Jones Industrial average was up about 240 points after the deal was announced.

Sen. Bob Bennett, R-Utah, said lawmakers had a deal “that will pass the House, pass the Senate, be signed by the Senate and bring a sense of certainty to the markets.”

The deal followed a speech by Bush where he delivered a dire message to the nation Wednesday night, saying without help the credit markets could trigger a “long and painful recession” with millions of job losses. He argued that only the U.S. government has the “patience and resources” to buy up mortgages and bonds based on them that have frozen the markets, and to hold them until their values recover.

Lawmakers said the deal would include four important changes from the proposal the Bush administration sent Congress last weekend. It will provide some help for homeowners facing foreclosure, give the Treasury power to take stakes in financial firms, set up tougher oversight of the process and put limits on executive pay.

House Speaker Nancy Pelosi, D-Calif., and Senate Majority Leader Harry Reid, D-Nev., said both houses were ready to act quickly once a final bill was crafted.

“I’m pleased with the progress that’s being made,” Pelosi told reporters today. “We want to pass this legislation responsibly and soon.”

Pelosi also said the House would vote on a second economic stimulus plan, which would include an extension of unemployment benefits. Democrats had been pitching a $50 billion proposal before the financial crisis; Pelosi said she hoped to get support from President Bush for the plan later today.

McCain, who said Wednesday he was suspending his campaign to focus on the financial crisis, did not arrive into Washington until midday. On Wednesday, the McCain and Obama campaigns released a joint statement addressing the crisis, but McCain rejected a call from Obama to support the principles that lawmakers agreed to today.

In a speech today, McCain agreed the plan should include oversight, some way for the government to recoup money and limits on executive pay.

“I am confident that before the markets open on Monday we can achieve consensus on legislation that will stabilize our financial markets, protect taxpayers and homeowners, and earn the confidence of the American people,” McCain said.

Democrats criticized McCain for parachuting into the debate, noting the Arizona senator has not cast a vote in the chamber since April. Reid said McCain had remained unclear about his stance, and that time was running short for him to back the plan.

“If John McCain is opposed to this, that’s too bad,” Reid said. “I think he’s standing in the way of completing this legislation.”

Contact JUSTIN HYDE at 202-906-8204 or jhyde@freepress.com.