Congress wants to avoid new Depression

WASHINGTON (Reuters) - No member of the U.S. Congress wants to be blamed for another Great Depression, particularly in an election year.

So Democrats and Republicans seemed certain on Friday to set aside objections to unprecedented federal intervention and approve a massive financial rescue plan, perhaps within days.

They will then head home in advance of the November 4 elections and hope it works.

"There are disagreements over aspects of the rescue plan but there is no disagreement that something substantial must be done," President George W. Bush said on Friday as negotiators entered a ninth day of talks on his $700 billion proposal.

"Nobody wants to do this," House Republican leader John Boehner of Ohio said this week. "But I would argue if we do nothing, we are jeopardizing our economy, jobs, people's retirement security."

"It will happen because it has to happen," House Speaker Nancy Pelosi, a California Democrat, told ABC's "Good Morning America."

Later on Friday, Rep. Barney Frank, a Massachusetts Democrat and a chief negotiator, said, "I am convinced by Sunday we will have an agreement."

To be sure, the fate of members of the Democratic-led Congress as well as the American people and the U.S. financial industry is at stake.

If a bailout succeeds, lawmakers will be part of a historic rescue that helps investors, homeowners and businesses -- big and small.

If it fails or lawmakers refuse to support a plan, they will be blamed for economic suffering and may be thrown out of office by angry voters.

"They will cut a deal because they don't want to throw the dice and come up short," said Ethan Siegal of the Washington Exchange, a firm that tracks Congress for investors.

Polls have shown public opposition to providing hundreds of billions of dollars to assist failed executives on Wall Street amid record home foreclosures and the worst financial crisis since the Great Depression some 70 years ago.

But as Norm Ornstein, a congressional scholar at the American Enterprise Institute put it, "A public that doesn't like this rescue package may like matters even less when the economy goes into the toilet."

HOUSE REPUBLICAN DEMANDS

Boehner warned that most of his fellow House Republicans may not vote for a $700 billion bailout unless their alternative, which would rely on private capital markets, rather than taxpayers, to free up frozen credit markets, receives serious consideration.

Sen. Charles Schumer of New York, a member of the Democratic leadership, told CNBC afterward that talks were "at a bit of an impasse," but that Democrats were willing to put the Republican proposal in the package to nail down a deal.

Democrats have been on the offensive. They charge that Republicans' traditional opposition to federal regulation helped trigger the Wall Street meltdown.

"President Bush said on (last) Friday that we should assign blame later -- which is, of course, exactly what you would expect the culprit of the crisis to say," said Senate Majority Leader Harry Reed, a Nevada Democrat.

Democrats, feeling they have been burned before by an overreaching Bush, particularly in the Iraq war, demanded court review and tough congressional oversight in any rescue plan.

They also blasted Republican presidential nominee John McCain for interrupting his campaign to come to Washington to join talks, accusing him of getting in the way.

McCain stayed one day before leaving on Friday to debate Democratic presidential rival Barack Obama in Mississippi. Aides said he would return to Washington afterward.

Senate Republican Leader Mitch McConnell brushed off criticism of McCain. "His goal is that we get it resolved," McConnell said.

(Additional Reporting by Karey Wutkowski; Editing by Peter Cooney)