Discussions surrounding a proposed $700+ billion bailout of the nation’s financial markets over mortgage bets gone horribly wrong took a dramatic turn late Thursday, after a group of Republicans in the House of Representatives surprised key lawmakers and proposed a separate bailout proposal during a key meeting with President Bush and members of the House and Senate. HW reported on the derailment of initial talks yesterday; as details have emerged, the House Republicans’ plan appears to involve banks and other financial institutions paying premiums to the Treasury in exchange for a government guarantee of some of the hardest-hit mortgage-backed securities. “Instead of a purchase scenario where you have the government injecting $700 billion right up front into the markets, what you have here is an insurance plan,” Rep. Eric Cantor (R-VA) told reporters, according to a report by the Associated Press. “In order to get this insurance, the banks with these failed assets would have to pay for the government backing, pay for the insurance.” Democratic lawmakers said they were caught off guard by the separate proposal, which has the backing of Republican presidential candidate John McCain (R-AZ), although House Republicans have contended they did not work on the plan behind closed doors. Both Barney Frank (D-MA), chairman of the House Financial Services Committee, and Chris Dodd (D-CT), chairman of the Senate Banking Committee, derided what Dodd called a “rescue plan for John McCain.” Frank said that House Republicans had “some kind of arrangement with McCain [and] went off into the whatever,” according to a report in CQ Politics. Rep. Ellen Tauscher (D-CA) told the Wall Street Journal on Friday that Sen. McCain, who suspended his campaign on Wednesday evening to return to Washington and focus on the credit crisis, “goes to a meeting and all of a sudden, we lose all the Republicans who have been working with us for the last five days.” Global financial markets teetered Friday morning on news that the bailout plan may have been derailed, as well, forcing President Bush to address the crisis publicly for the second time in three days Friday morning, assuring that some form of package would yet be passed by lawmakers. Administration officials said that Treasury Secretary Henry Paulson was back on Capitol Hill attempting to fanagle a deal with clearly frustrated lawmakers. “There are disagreements over aspects of the rescue plan, but there is no disagreement that something substantial must be done,” President Bush said in a press conference Monday morning. “The legislative process is sometimes not very pretty, but we are going to get a package passed.” That House Republicans would undercut a proposal by Bush administration officials is telling, however, and that McCain would allegedly lead the effort to do so personally, clearly underscores the GOP presidential nominee’s desire to distance himself from the current administration as he strives to convince a skeptical public that a McCain/Palin administration would not repeat many of the policy choices pursued by a largely unpopular Bush adminstration. The involvement of both presidential candidates on the bailout negotiations appears to be generating mixed response on Capitol Hill; while McCain has aggressive sought to insert himself into the debate, Democratic nominee Barack Obama (D-IL) has sought a lower-key role. “When you inject presidential politics into delicate negotiations, it’s not necessarily as helpful as it needs to be,” Obama told reporters. Republican leaders, however, voiced vocal hop that McCain would propose something conservative GOP members could strongly support. “I’m hoping we wait for John McCain to propose a plan the entire Republican caucus can get behind,” Rep. Joe Pitts (R-PA) told CQ Politics. The strongest opponent of Treasury’s proposal to buy billions of dollars’ worth of troubled ABS/MBS/CDO assets has been Sen. Richard Shelby (R-AL), the ranking member on the Senate Banking Committee. After Democratic lawmakers told members of the press that a deal had been reached Thursday, sending stock markets soaring, Shelby was quick to redress that notion, saying that as far as he was concerned, no deal had been reached. Little has changed between last night and Friday morning, a source on Capitol Hill suggested to HW.