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'Sobering moment' forged bipartisan support for bailout plan

  • Story Highlights
  • Assessment of financial situation "sobering moment," Dodd says
  • Treasury expected to send plan to Capitol Hill on Friday afternoon
  • Lawmakers will work on plan to create a new trust over the weekend
  • Leaders says they expect to pass legislation before they adjourn next week
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WASHINGTON (CNN) -- Congressional leaders said Friday that they were determined to quickly pass a massive plan to stabilize the financial market after they heard a "sobering" assessment from the administration's economic team.

Rep. Barney Frank, left, and Sen. Chris Dodd had a serious outlook about the economy Thursday evening.

Rep. Barney Frank, left, and Sen. Chris Dodd had a serious outlook about the economy Thursday evening.

"I've never been in a more sobering moment in my 28 years with the language used, careful language used by the financial leaders of this administration, of this country," Sen. Chris Dodd, D-Connecticut said Friday while describing a meeting Treasury Secretary Henry Paulson, Federal Reserve Chairman Ben Bernanke and Securities and Exchange Commission Chairman Christopher Cox had with the congressional leadership Thursday night.

Sen. Charles Schumer, D-New York, said that when he heard what might happen to the economy if Congress failed to act, "I gulped."

The Treasury Department was expected Friday afternoon to send the proposal to allow a federal trust to buy bad mortgage assets from banks at a discount. Paulson said the federal government would have to commit "hundreds of billions" of dollars to the trust to solve the credit crisis that is undermining the economy. Video Watch Paulson say billions will be needed »

Rep. Barney Frank, the Democratic chairman of the House Financial Services Committee, said the bipartisan leadership agreed that the government must buy the "illiquid" assets "because the consequence of not doing so are so bad."

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"Everything else hasn't worked," said Frank, D-Massachusetts. "It has to be done systematically."

A top Senate Democratic aide said "key players" in the Senate -- including Dodd, chairman of the Senate Banking Committee, and the committee's ranking Republican, Sen. Richard Shelby of Alabama -- would be working through the weekend on the proposal.

Several lawmakers said they expected to make only "tweaks" to the Treasury proposal.

"There is not supposed to be a lot of negotiations. Everyone expects [the language] to be pretty on the money in terms of what they said last night," the Democratic aide said.

Frank said his House committee would work on the bill Wednesday and said Congress would pass the legislation before it adjourns, currently set for September 26. House Speaker Nancy Pelosi said Congress could stay in session past then, if necessary. See the historical precedent for federal bailouts »

Schumer said the normal partisan fighting often seen on Capitol Hill was absent during the meeting with the administration's economic team.

"If the American people were a fly on the wall at the meeting, they would have been proud," Schumer said in a statement. "Everyone put aside their partisan differences and agreed to work together to pass something to address the state of the economy."

Despite the bipartisan backing of the leadership, some conservative Republicans expressed concerns about the plan.

"We realized there's stress, more than discomfort in our financial markets," Shelby said, but "this could be a trillion dollars."

"The taxpayers can't front everything, can't pay for everything. Some people have got to pay themselves," he added.

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One conservative Republican also worried that the plan would move toward socializing risk in the marketplace. Video Watch Rep. Ron Paul call the bailout unconstitutional »

"What is missing from it -- and the recent string of bailouts -- is a commitment to return to free enterprise economy," said Sen. Jim DeMint, R-South Carolina. "The federal government caused this problem by using taxpayer dollars to implicitly guarantee millions of mortgages. ... This socialization of risk removed market accountability and has now set off a chain of events that is threatening the entire economy."

CNN's Ted Barrett, Deirdre Walsh, Lesa Jansen and Scott J. Anderson contributed to this report.

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