Sept. 21 (Bloomberg) -- U.S. Democratic lawmakers said they would act quickly on a $700 billion rescue plan for financial companies, while demanding that the legislation limit compensation for executives of companies that will benefit.

Treasury Secretary Henry Paulson urged the measure be passed ``clean and quick'' and Democrats, who control both houses of Congress, pledged not to tie the measure to an economic stimulus plan or slow down its passage.

``I know of nobody who is arguing over the amount of money or even about that the secretary ought to have the authority to purchase these toxic instruments, these bad debts,'' said Senator Christopher Dodd, the Democratic chairman of the Banking Committee.

Still, Democrats said they would seek changes, including limiting executive compensation and offering new help to homeowners struggling to avoid foreclosure. Representative Barney Frank, the chairman of House Financial Services Committee, wants the U.S. Comptroller General to be able to audit the Treasury's program. Lawmakers and Paulson both signaled a willingness to compromise.

President George W. Bush and Paulson have said Congress must promptly pass the legislation that would be the most far- reaching federal intrusion into markets since the Great Depression.

``This is not a position where I like to see the taxpayer, but it is far better than the alternative,'' Paulson said on NBC's ``Meet the Press.''

Paulson's Proposal

Congress will consider this week the administration's request for authority to buy devalued mortgage-related securities from investment firms in an effort to keep the financial system from coming to a standstill. The proposal would prevent courts from reviewing the Treasury's actions while raising the nation's debt ceiling to $11.315 trillion from $10.615 trillion.

Democrats said today that they understand Paulson's demand for passage of a bill that is not weighed down with a myriad of proposals. ``We will not Christmas-tree this bill,'' Senator Charles Schumer, a New York Democrat, said on ``Fox News Sunday'' television program. ``The times are too urgent.''

House Speaker Nancy Pelosi said in a statement today that Congress will take action this week, while adding that Democrats want more oversight of the proposed federal program. Democratic presidential candidate Barack Obama also said lawmakers must insist on more oversight.

Call for Safeguards

Pelosi said that the administration's $700 billion proposal ``does not include the necessary safeguards.''

``Democrats believe a responsible solution should include independent oversight, protections for homeowners and constraints on excessive executive compensation.''

``We will not simply hand over a $700 billion blank check to Wall Street and hope for a better outcome,'' she said.

Frank said it would be a ``grave mistake'' not to include a executive pay provision, while Paulson called such a measure ``punitive.''

On new aid for homeowners, Paulson signaled a willingness to compromise. The Treasury secretary said that while the bill could include ``mortgage relief components,'' the administration's plan already addresses the issue.

`Regrettable' Foreclosures

Paulson also said that ``the vast majority of foreclosures in this country -- as regrettable as they are and as painful as they are -- are coming from people who either don't want to stay in their home and live up to their obligations or those that never had the financial capability to stay in their home.''

Frank also proposed that the U.S. Comptroller General should ``commence ongoing oversight of the activities and performance'' of the plan and of ``any agents and representatives'' of the initiative, according to legislative language presented to Treasury officials today and obtained by Bloomberg News.

The Comptroller General, who serves as director of the Government Accountability Office, and other GAO officials would have access to financial records, have audit powers and would report findings to Congress, under Frank's measures.

Obama said in a statement that in return for the $700 billion ``the American people must be assured that the deal reflects some basic principles.''

He said Democrats will insist on oversight, and a structure most likely to recoup any government expenditures. Democrats should also demand that other countries participate in securing financial markets, he said.

Obama is in touch with Frank, Paulson and congressional leaders, his spokeswoman Linda Douglass said.

McCain Speech

His Republican rival for the presidency, Senator John McCain, cited in a Baltimore speech today his plan to create a new government entity to identify bad loans and eventually sell them. McCain criticized Obama for not advancing his own proposals to deal with the crisis.

Republicans warned of dire consequences if the proposal becomes bogged down in partisan politics. ``This could be the most serious financial crisis the world has ever dealt with,'' said House Minority Leader John Boehner, a Republican from Ohio, said on ABC's ``This Week.''

To contact the reporter on this story: Christopher Stern in Washington at Cstern3@bloomberg.net

Last Updated: September 21, 2008 18:23 EDT