Meanwhile, a bipartisan group of lawmakers sent a letter to the SEC chairman Christopher Cox demanding he immediately suspend mark-to-market accounting rules. The banking industry has been pushing for weeks for such relief, but now backers can claim a champion who is not an industry lobbyist.
The SEC and Financial Accounting Standards Board has issued new guidance that clarifies how banks value loans in troubled markets. But it doesn't repeal mark-to-market accounting. See, http://www.fasb.org/news/2008-FairValue.pdf
Lawmakers are turning to Mr. Isaac partly because they view him as a financial wise man who helped right the world's biggest economy through one of its worst crises.
As lawmakers on Sunday were wrapping up their negotiations on the now-defeated financial rescue package, Mr. Isaac was selling House sceptics on his own plan.
Early in the day, he spoke to 40 to 60 House Democrats, followed by a meeting with roughly 30 House Republicans, he said. Then, he appeared at the tail-end of a Democratic caucus meeting, after the leaders and all but 30 or 40 of the rank-and-file had left.
He stayed late into the night talking with House conservatives about his plan. On Monday, he returned to meet with a group of 60 Democrats and Republicans.
Mr. Isaac said his remarks generated applause from the lawmakers, calling the response of House conservatives "overwhelming." He expressed disappointment that no leaders of Congress attended the meetings. In the days since, he has been e-mailing and talking on the phone with lawmakers who rejected the industry bailout.
Mr. Isaac claims strong support for his plan.
"A very large percentage of the 228 people believe in the four items I described," he said.
"Offices are discussing changes to the Paulson proposal based on the ideas of Bill Isaac and others," said a congressional aide familiar with the matter. The aide said that both Republican and Democratic offices were involved in the discussions.
Mr. Isaac argued the defeat of the rescue package wasn't due to partisan politics. Instead, he believes lawmakers felt the Treasury's plan wouldn't work and it was being forced down their throats.
Mr. Isaac, who as FDIC chairman, oversaw the rescue of Continental Illinois National Bank and Trust, said none of his proposals require legislation, including the issuance of net worth certificates by the FDIC.
The approach, in which the FDIC buys subordinated debt in ailing banks, is aimed at helping only those banks deemed capable of weathering the current turmoil if given a dose of fresh capital, Mr Isaac said.
He admitted he resisted the idea when it first surfaced as a response to the thrift crisis. As the then-chairman of the FDIC, he waited until Congress acted by passing legislation to force his hand.
(Note: You can view every article as one long page if you sign up as an Advocate Member, or higher).
