The federal bailout of Wall Street is in limbo after Republican lawmakers refused to support an emerging deal between the Bush administration and Democratic leaders. The surprise move came hours after it appeared all sides were close to an agreement. The proposed deal would spend some $700 billion to buy up defaulted Wall Street debts, while also imposing some executive pay limits and granting the government equity that could possibly be sold to help recoup the bailout costs. But as talks progressed, congressional Republicans emerged to propose an alternative plan emphasizing insurance for mortgage-based assets and further deregulation of the financial sector. Lawmakers huddled at the Capitol Building until late in the evening. Democratic Congress member and House Banking Committee Chair Barney Frank blamed Republicans for the delay.

Rep. Barney Frank: “House Republicans stayed for a while and then left. And at this point we are told that the House Republicans have no plan to participate in helping draw this up or having any commitment to help pass it.”

Many Democrats pointed the finger at Senator John McCain, saying his involvement in the talks helped derail an emerging deal. Connecticut Senator and Senate Banking chair Christopher Dodd called the meeting “a rescue plan for John McCain.” McCain has been accused of waging a political stunt after announcing he would suspend his campaign to help push through an agreement on the financial crisis.

The stalemate came as regulators announced the seizure of the savings and loan giant Washington Mutual, making it the largest bank failure in US history. Under a government-brokered deal, WaMu will be sold off to JPMorgan Chase. JPMorgan acquired the investment bank Bear Stearns under a similar federal-backed effort earlier this year. About ten percent of WaMu’s branches are expected to be shut down nationwide.

As talks proceeded in Washington, protesters took to the streets across the country to oppose a Wall Street bailout. In New York, a series of demonstrations occurred near the Stock Exchange.

Meanwhile, on the campaign trail, it remains unclear if McCain will join Obama tonight for their scheduled debate at the University of Mississippi. Speaking at the Clinton Global Initiative Meeting in New York, McCain indicated he still plans to skip out.

Sen. John McCain: “As of this morning, I suspended my political campaign, as you know, with so much on the line for America and the world. The debate that matters most right now is taking place in the United States capital, and I intend to join it. Senator Obama is doing the same. America should be proud of the bipartisanship that we’re seeing.”

Obama, meanwhile, told the same crowd he wants the debate to proceed.

Sen. Barack Obama: “Our election is in forty days, our economy is in crisis, our nation is fighting two wars abroad. The American people, I believe, deserve to hear directly from myself and Senator McCain about how we intend to lead our country. The times are too serious to put our campaign on hold or to ignore the full range of issues that the next president will face.”

In other campaign news, Alaska Governor Sarah Palin has been caught in an apparent gaffe after claiming the US has achieved “victory” in Iraq. Speaking to CBS News anchor Katie Couric, Palin said, “a surge in Afghanistan also will lead us to victory there, as it has proven to have done in Iraq.” Palin was also asked about her comments that an Israeli attack on Iran shouldn’t ever be “second guessed.”

Alaska Gov. Sarah Palin: “We don’t have to second-guess what their efforts would be if they believe that it is in their country and their allies, including us, all of our best interests to fight against a regime, especially Iran, who would seek to wipe them off the face of the earth. It is obvious to me who the good guys are in this one and who the bad guys are. The bad guys are the ones who say Israel is a stinking corpse and should be wiped off the face of the earth. That’s not a good guy who is saying that. Now, one who would seek to protect the good guys in this, the leaders of Israel and her friends, her allies, including the United States, in my world, those are the good guys.”

In environmental news, a new study says the rise in carbon dioxide emissions has outpaced even the most dire scientific projections. The Global Carbon Project says CO2 emissions rose nearly three percent last year. That’s at the high end of the projections from the world’s leading scientific panel on global warming, the Intergovernmental Panel on Climate Change. Researchers say the rise could mean a global temperature increase of eleven degrees by the end of the century. Climate scientists have warned of massive environmental catastrophe if increases in carbon dioxide emissions top three percent.

Meanwhile, former Vice President Al Gore has encouraged young people to engage in civil disobedience against coal plants unable to store carbon. In an address to the Clinton Global Initiative in New York, Gore said, “I believe we have reached the stage where it is time for civil disobedience to prevent the construction of new coal plants that do not have carbon capture and sequestration.”

On Capitol Hill, the Senate Armed Services Committee convened a hearing Thursday on the treatment of prisoners in US custody in Iraq, Afghanistan and at Guantanamo Bay. Air Force instructor and Iraq veteran Colonel Steven Kleinman testified he witnessed a deliberate program of what he called “punishment” against Iraqi prisoners. Kleinman said forced nudity, sleep deprivation and painful shackling were all used against those who wouldn’t cooperate with US interrogators. The techniques were the same as those taught in a Pentagon program to prepare US servicemembers for what they would experience under foreign captors who don’t respect the Geneva Conventions. In one case, Kleinman said he witnessed a prisoner forced to kneel beneath a spotlight and repeatedly hit across the face with every answer he gave. Kleinman said the interrogators were baffled when he tried to stop the beating. Democratic Senator and Armed Services Committee Chair Carl Levin was the lone senator to attend the hearing.

Meanwhile, the Senate Judiciary Committee has voted to subpoena the Justice Department’s Office of Legal Counsel for documents outlining Bush administration authorization of harsh interrogation techniques.

The nation’s top psychiatric organization is accusing the Pentagon of violating a pledge not to use psychiatrists in the interrogation of foreign prisoners. In a letter to Defense Secretary Robert Gates, American Psychiatric Association president Dr. Nada Stotland writes, “The use of psychiatrists to aid in interrogations is a serious violation of medical ethics and should be discontinued.” Opposition to involvement in interrogations is on the rise within the ranks of the nation’s mental health specialists. Last week, members of the American Psychological Association approved a landmark vote barring members from taking part in the interrogations.

President Bush hosted Palestinian President Mahmoud Abbas at the White House on Thursday. Bush said he could offer no commitments on any key issues but said he is still committed to his “vision” for a peace deal.

President Bush: “As you know, I’ve got four more months left in office, and I’m hopeful that the vision that you and I have worked on can come to pass. And my only
pledge to you is that I’ll continue to work hard to see that it can come to pass. And so, I welcome you back, and I think it’s safe for me to say I welcome you back, my friend.”

Bush has repeatedly offered statements on reaching a “framework” and “vision” on a peace deal but has refused to address any significant issues. Some Palestinians have criticized the Abbas-led government for even meeting with Bush as he continues to support Israeli settlement expansion in the occupied West Bank.

Meanwhile, in Israel, an Israeli historian known for his criticism of the Israeli occupation of the West Bank and Gaza has been targeted in a bombing attack. Zeev Sternhell was lightly injured when a pipe bomb exploded at his Jerusalem home. Israeli police say they’re investigating right-wing settler groups. Fliers found near Sternhell’s home were said to offer hundreds of thousands of dollars for killing members of Peace Now, an Israeli group also critical of the settlements. Born in 1935 in Poland, Sternhell survived the Nazi Holocaust. He is widely known for his studies on fascism.

In Pakistan, US and Pakistani troops have exchanged fire near the Afghan border. Pakistan says it opened fire after a US-Afghan force crossed the border. The US says its troops were behind the Afghan side. A series of cross-border attacks by US troops have heightened tensions between the US and Pakistan.

East Timorese President Jose Ramos-Horta was among the world leaders to address the UN General Assembly on Thursday. Ramos-Horta called for an end to the US embargo on Cuba.

East Timorese President Jose Ramos-Horta: “As a friend of the US, I humbly appeal to the next US administration and congress to lift the embargo on Cuba. Such a gesture would be an honorable one, and my admiration for the US would only increase. As it is, as I witnessed the impact of US sanctions on a small developing country and its refusal to provide assistance unconditionally to Cuba following the devastation caused by cyclones Gustav and Ike, my heart bleeds in sorrow, and my admiration for the US seriously diminishes.”

Back in the nation’s capital, opening statements began Thursday in the corruption trial of Republican Senator Ted Stevens. The Alaskan senator faces seven felony charges for receiving payments and gifts from the now-defunct oil services company VECO. In a preview of his defense strategy, Stevens attorney Brendan Sullivan laid blame on Stevens’ wife, Catherine Stevens, saying she controls the Stevens family finances.

A federal judge has given Louisiana a four-month deadline to dismiss charges or retry a former Black Panther whose murder conviction for the 1972 killing of a prison guard was recently overturned. The prisoner, Albert Woodfox, and two other former Black Panthers are known as the Angola Three. Many believe they were framed for their political activism. Woodfox’s conviction was overturned after a judge ruled his lawyer failed to properly challenge the credibility of witnesses who later admitted they were coerced into falsely testifying. Woodfox has spent more than three decades in solitary confinement.

And here in New York, police are admitting at least partial fault in the death of a mentally handicapped man who fell from a building after he was tasered. Thirty-five-year-old Inman Morales was standing naked on a ledge when police confronted him to try to bring him down. Police say they had called for an inflatable bag to break Morales’s fall. But it had not arrived before an officer struck him with the taser weapon, sending him plunging to his death. Police say the incident violated some departmental guidelines but are not disciplining the officers.