When John Boehner scuppered the nearly-sealed bailout deal at yesterday's meeting, the House minority leader proposed an alternative plan: a bank-financed insurance system that would rescue individual mortgages. Under the GOP proposal, the government would not buy up the toxic mortgage-backed securities at the heart of the crisis but instead rely on a more market-based approach. The treasury and the Federal Reserve had already considered and rejected such a plan, notes the Washington Post.
It's such a fundamental departure from the current plan that President Bush urged Boehner not to "start over" at the meeting. It relies on classic conservative principles, such as loosening regulation in order to free up private capital, instead of government intervention. But few on Capitol Hill expect it to make any progress. A White House spokesman says Paulson and Bernanke rejected it along with Bush, while Democrats accused Boehner of acting at the behest of John McCain to disrupt the bailout.