Hank Paulson went before Congress to ask that he get a shit-ton of money to purchase mortgage-backed securities. The bipartisan Joint Economic Committee hammered out a compromise, giving Paulson some of what he wanted but with more oversight and perhaps a better deal for taxpayers. John McCain ran back to Washington to solve this himself, and as soon as his plane touched down the compromise fell apart, with conservative House Republicans balking at passing anything resembling the Paulson plan. So what happened yesterday, exactly? Who do we blame for everything? And what'll happen now? Your financial and congressional newspapers have the story. In case you're not a Roll Call or Wall Street Journal subscriber, we'll explain what they're saying about this mess. The Wall Street Journal on what happens now:

Democrats could decide to go ahead with their plan without Republicans. While this would ensure passage, it would essentially saddle Democrats with responsibility for a bailout package that has stirred up strong resistance among both Democrat and Republican voters — with elections just weeks away. [...] If Democrats are forced to move forward on their own, the party's demands on the White House are sure to go up. Proposals that once seemed off the table — such as a plan to give bankruptcy judges authority to adjust mortgage terms — would likely gain new life. The prospects would also likely rise for Democratic proposals to stimulate the economy, such as new spending on roads and bridges and extended federal benefits for the unemployed.

But they won't want to do that because the bailout plan is unpopular (depending entirely on how it is explained and described to voters) so they need the support of Congressional Republicans in order to make sure Democrats facing reelection don't have the albatross of bailing out Wall Street around their necks. This close to an election, it's better to be obstructionist (while complaining about a do-nothing congress) than bold. Roll Call (in a special Friday edition!) on the negotiations: Senate Republicans are pissed at House Republicans and John McCain, for sabotaging the progress they made:

Senate Budget ranking member Judd Gregg (R-N.H.) said he didn’t know whether the process would break down as a result of House Republicans. “I certainly hope that rational minds will take control of the process on both sides,” Gregg said. “The problem isn’t hypothetical. It’s real.”

House Fanancial Services committee ranking Republican Spencer Bachus has now pissed off everyone because he acceded to the Dodd/Frank compromise and went to their little press conference and then he announced that House Republicans were rebelling. He was forced to put out a statement announcing that even though he was the ranking Republican involved in the negotiations, he did not represent House Republicans. Congress will probably be in session through the weekend, though the Senate's schedule is "murky." They still have to pass "a continuing resolution, a stimulus bill and the bailout." Democrats might sneak the bailout into the CR, though that is a last resort move. Probably no votes today on anything. Mark Ambinder on whether this is McCain's fault. Yes and no. He didn't say a damn word to anyone during the Cabinet Room meeting. So he didn't bring up the John Boehner/House Republicans plan, and he didn't attack the Paulson deal. He is "urging all sides to come together."

But Boehner and the White House — and McCain — if they want to get something passed — do have the responsibility to persuade these Republicans to support the bailout . After all, if not to get these recalcitrant Republicans on board, why did McCain go to Washington in the first place?

So he's doing nothing, at all, except providing political cover to Republicans who don't want to vote for this.