KEY POINTS:
In a few short weeks we might better appreciate the political achievement of President Bush in Washington yesterday. In the heat of an election campaign he managed to bring the presidential contenders, John McCain and Barack Obama, to a White House meeting on the financial crisis.
The meeting
had more symbolism than substance; the real dealing between Republicans and Democrats on the President's rescue package is being done by congressional leaders at the Capitol. But symbolism will be important too. It offers buy-in from the McCain and Obama campaigns, reducing the risk that the bail-out will be undone by the election.
The relief plan will be of limited value if it is disowned by the man elected President in less than six weeks.
Mr Bush had no option but to attempt an unprecedented meeting with both of the candidates to succeed him. Their attendance was a credit to him and to them.
At the same time, the examination of the plan so far has been a tribute to the good sense and urgency of both parties in the Congress, which has had just a week to study the extraordinary proposals before the end of its term. Final agreement still eludes them but the will to resolve the issues seems to be there.
Both parties had deeply-felt objections to elements of the scheme by which the federal Government will take on Wall St's bad debts.
Republicans were uncomfortable with the scale of the interference with the financial market and the powers they were being asked to invest in Treasury Secretary Henry Paulson. Democrats were rightly concerned that those who made the bad loans would not only be relieved of them but nothing in the plan prevented their walking away with unwarranted pay-outs.
The outline of a possible accord yesterday would initially give the President only a fraction of the US$700 million he sought to stave off residential mortgage foreclosures and other ill-effects of the crisis. Congress clearly means to keep control of the purse, forcing the Administration to apply for further tranches as they are needed.
It seems to be agreed that the Government will take equity in companies helped by the bailout, which would be fairer to taxpayers than an insurance arrangement. The federal Treasury is likely to lose money on the mortgages it will buy but if there is any profit the taxpayer should have it. An insurance solution would mean the public carried the risk with no prospect of gain.
The legislators have agreed also to regulate against excessive compensation of executives, though the details are unclear. The most crucial element of the package will be the price that the Government proposes to pay for sub-prime mortgages. They carry such poor security that they are practically worthless and the payment is merely to keep the mortgagee afloat. But if the price is the minimum necessary, the Government might be able to recover its money over a reasonable period.
Unpalatable as it may be to Republicans, the Government is going to be a major participant in the home mortgage market for a good while. That, as the President says, is the lesser of two evils. The consequences of escalating financial collapse would be much worse.
If there are better solutions it is up to Mr Obama or Mr McCain to find them. So far neither has proposed one and time is pressing. Mr Paulson's scheme has quietened the crisis this week but the mood in the markets is fragile. The world can but hope that US political co-operation remains a confidence booster, and a deal can be done that works.
