Wall St. bailout talks continue Friday: Rep. Frank

WASHINGTON (Reuters) - U.S. congressional negotiations on a proposed $700 billion financial industry bailout will enter a ninth day on Friday, with no sign that balking Republicans in the House of Representatives will participate.

After a late-night meeting on Thursday with Treasury Secretary Henry Paulson and other lawmakers, Democratic Rep. Barney Frank said House Speaker Nancy Pelosi would not bring a "partisan" bill up for a vote, meaning at least some House Republicans would have to sign on.

"For House Republicans to take a walk is just appalling," Frank told reporters.

He said he hoped President George W. Bush and Republican presidential nominee John McCain could convince them to join the talks.

At a White House meeting with congressional leaders, Bush, McCain, and Democratic presidential candidate Barack Obama held what was described as a contentious session on the bailout proposal.

Controversy erupted over a new proposal by House Republicans, which would scrap the legislation that had been crafted so far by Paulson and lawmakers, in favor of a proposal by conservatives.

"Secretary Paulson has told us several times that the number one plank of the House Republican plan, an insurance scheme, will not work," Frank said.

Despite the rancor, the Massachusetts Democrat said there was reason for optimism, saying Senate and House Democrats, along with Senate Republicans and the Treasury Department, were working together to reach an agreement and "there aren't huge differences."

"I can't believe that House Republicans are going to continue to defy George Bush or that John McCain isn't going to try to help," said. "There is optimism."

South Carolina Republican Sen. Lindsey Graham, a McCain supporter, said negotiators had not been crafting a plan that had any chance of winning congressional approval.

"I know that the Republican plan has no chance of passing," Graham said. "Let's find some middle ground and get this thing done."

(Reporting by Richard Cowan and Thomas Ferraro; editing by Chris Wilson)