Local News

WASHINGTON (AP) ― Finding rare common ground, GOP Sen. Norm Coleman and DFL challenger Al Franken said Tuesday that the $700 billion plan to bail out the financial industry should not be a "blank check," and agreed on several elements on what should be in the package.

But the two differed sharply on Franken's insistence that the plan freeze home foreclosures and allow bankruptcy judges to reset mortgages on primary residences, which Coleman argued would lead to higher interest rates.

The back-and-forth took place on the same day that Federal Reserve Chairman Ben Bernanke warned Congress that failing to pass the plan could lead to a recession with higher unemployment and increased home foreclosures. Under the legislation the administration is pushing, the government would be allowed to buy bad mortgages and other troubled assets held by endangered banks and financial institutions.

Franken said he wouldn't vote for the package unless it included several principles, including independent oversight by Congress, taxpayer equity stake in companies that are being bailed out, no "golden parachutes" for CEOs of such companies, and the freeze on home foreclosures.

"Not one dime should go to this bailout without independent oversight, real accountability and complete transparency," he said.

Franken also called for the establishment of a Financial Products Safety Commission, which would be charged with providing guidance to consumers on whether financial products such as mortgages are safe. But Franken said that not having that wouldn't be a deal-breaker.

Coleman, following a Republican Senate luncheon with Treasury Secretary Henry Paulson, said, "My concerns are focused on Main Street and not Wall Street," but that what happens in the financial sector affects all Americans.

"I do appreciate the urgency of the administration in the need to respond to the crisis, but I also believe that we have to make sure there are no blank checks here," he said.

Like Franken, Coleman said there should be no excessive compensation for executives of companies receiving a bailout, "because we're dealing with the federal credit card."

Asked about Franken's call for taxpayers to get equity share in such companies, he responded, "I think that's a good idea. I actually support taxpayer equity."

But Coleman knocked Franken's idea on freezing home foreclosures and allowing bankruptcy judges to reset mortgages on primary residences.

"That would hurt homeowners," he said. "You'd face less access to credit and higher interest rates."

Also Tuesday, Franken mocked Coleman for suggesting at a campaign event over the weekend in North Mankato that the federal government could make money on the bailout.

"The government could make 10 or 20 times what it pays on this, possibly," Coleman said, according to a story in The Free Press. The government could profit, he said, if assets such as bad loans that are purchased for 10 or 20 cents on the dollar increase in value.

Franken, who was in Washington to address Democratic senators at their weekly luncheon, called on Coleman to explain how that would work and in what time frame.

"Because when I talk to Minnesotans, I'm not hearing a lot of excitement about what a great payoff this investment is going to have," Franken said on a call with reporters, adding, "Frankly, I hear a lot of outrage."

Coleman said Tuesday that he was speaking more broadly about instances where the government gets a good return on its investment on bailouts. He said it was too soon to speculate on what kind of return it could get from the bailout under consideration in Congress.

"Many of these assets that are going to be sold do have value," he said. "These assets are going to be bought at a price that's below market value, but probably just above fire sale."

If the plan is done right, Coleman added, "It's very clear to say that the taxpayers can expect that the investment that they make will be protected."

And in a dig at Franken, Coleman said, "This really is a time for statesmanship and leadership and not partisan bickering."

Meanwhile, Rep. Jim Ramstad, R-Minn., issued a statement opposing the plan.

"The Bush administration's $700 billion bailout plan for Wall Street imposes great risk to taxpayers and no guarantee of success," he said. "Nobody knows what this complex financial scheme will produce, so the final cost to taxpayers is uncertain."

-------

Norm Coleman was born in New York City in 1949. Al Franken was born in New York City in 1951.

(© 2009 CBS Broadcasting Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.)