Congress OKs historic bailout bill; Bush signs it

Oct 3, 2008, 3:19 PM EDT

By JULIE HIRSCHFELD DAVIS and DAVID ESPO Associated Press Writers

WASHINGTON (AP) --

With the economy on the brink and elections looming, Congress approved an unprecedented $700 billion government bailout of the battered financial industry on Friday and sent it to President Bush who quickly signed it.

"We have acted boldly to help prevent the crisis on Wall Street from becoming a crisis in communities across our country," Bush said shortly after the vote, although he conceded, "our economy continues to face serious challenges."

Underscoring that somber warning, the Dow Jones industrials, up more than 200 points at the time of the House vote, had fallen into negative territory an hour later. They fluctuated as the afternoon wore on.

The final vote, 263-171 in the House, capped two weeks of tumult in Congress and on Wall Street, punctuated by daily warnings that the country confronted the gravest economic crisis since the Great Depression if lawmakers failed to act. There were 58 more votes for the measure than an earlier version that failed on Monday.

"We all know that we are in the midst of a financial crisis," House Republican leader John Boehner of Ohio said shortly before casting his vote for a massive government intervention in private capital markets that was unthinkable only a month ago.

"And we know that if we do nothing, this crisis is likely to worsen and to put us into an economic slump like most of us have never seen," he said.

House Speaker Nancy Pelosi, D-Calif., said the bill was needed to "begin to shape the financial stability of our country and the economic security of our people."

Treasury Secretary Henry Paulson pledged to begin using his new authority quickly, and Federal Reserve Chairman Ben Bernanke said the central bank would work closely with the administration.

Wall Street welcomed the action, but investors also were buffeted by a bad report on the job market. The Labor Department said employers slashed 159,000 jobs in September, the largest cut in five years and further evidence of a sinking economy.

At its core, the bill gives the Treasury Department $700 billion (from whom? the US government is $10 trillion in debt) to purchase bad mortage-related securities that are weighing down the balance sheets of institutions that hold them. The flow of credit in the U.S. economy has slowed, in some cases drying up, threatening the ability of businesses to conduct routine operations or expand, and adversely affecting consumers seeking financing for mortgages, cars and student loans. Some state governments have also experienced difficulty borrowing money.

The House vote marked a sharp change from Monday, when an earlier measure was sent down to defeat, largely at the hands of angry conservative Republicans.

On Friday, 91 Republicans joined 172 Democrats to support the bill, while 108 Republicans and 68 Democrats opposed it. Twenty-five Republicans and 33 Democrats switched their votes from "no" to "yes." One Democrat who supported Monday's version, Rep. Jim McDermott of Washington, opposed the bill Friday. One Republican who didn't vote Monday, Rep. Jerry Weller of Illinois, voted "yes" on Friday.

Several of the Democrats who switched were members of the Congressional Black Caucus who said presidential candidate Barack Obama had pledged to support legislation easing the burden on consumers if he wins the White House (What if he doesn't win elections?).

Republican presidential candidate John McCain also lobbied for the measure, according to aides who declined to release a list of lawmakers he called.

Following Monday's vote, Senate leaders quickly took custody of the measure, adding on $110 billion in tax and spending provisions designed to attract additional support, then grafting on legislation mandating broader mental health coverage in the insurance industry. The revised measure won Senate approval Wednesday night, 74-25, setting up a furious round of lobbying in the House as the administration, congressional leaders, the major party presidential candidates and outside groups joined forces behind the measure.

In addition, the measure was changed to broaden the federal government's deposit insurance program, and the Securities and Exchange Commission loosened a regulation to ease the impact of the distressed assets on the balance sheet of financial institutions.

Despite occasionally strong criticism of the added spending and tax measures, the maneuvers worked - augmented by a sudden switch in public opinion that occurred after the stock market took its largest-ever one-day dive on Monday.

"No matter what we do or what we pass, there are still tough times out there. People are mad - I'm mad," said Republican Rep. J. Gresham Barrett of South Carolina, who opposed the measure the first time it came to a vote. Now, he said, "We have to act. We have to act now."

Rep. John Lewis, D-Ga., another convert, said, "I have decided that the cost of doing nothing is greater than the cost of doing something."

Critics were unrelenting.

"How can we have capitalism on the way up and socialism on the way down," said Rep. Jeb Hensarling of Texas, a leader among conservative Republicans who oppose the central thrust of the legislation - an unprecedented federal intervention into the private capital markets.

It was little more than two weeks ago that Paulson and Bernanke concluded that the economy was in such danger that a massive government intervention in the private markets was essential.

While the main thrust of their initial proposal was unchanged, lawmakers insisting on greater congressional supervision over the $700 billion, measures to protect taxpayers and steps to crack down on so-called "golden parachutes" that go to corporate executives whose companies fail.

Earlier in the week, the legislation was altered to expand the federal insurance program for individual bank deposits, and the Securities and Exchange Commission took steps to ease the impact of the questionable mortgage-backed securities on financial institutions.

In the moments before the vote, Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee, pledged "serious surgery" next year to address the underlying causes of the crisis.

If anything, the economic news added to the sense of urgency.

The Labor Department said initial claims for jobless benefits had increased last week to the highest level since the gloomy days after the 2001 terror attacks. The news of the payroll cuts came on top of Thursday's Commerce Department report that factory orders in August plunged by 4 percent.

Typifying arguments the problem no longer is just a Wall Street issue but also one for Main Street, lawmakers from California and Florida said their state governments were beginning to experience trouble borrowing funds for their own operations.

Pelosi said, "We must win it for Mr. and Mrs. Jones on Main Street."

One month before Election Day, the drama unfolded in an intensely political atmosphere.

Members of the Congressional Black Caucus credited Obama with changing their minds.

Reps. Elijah Cummings and Donna Edwards, both Maryland Democrats, were among them. They said Obama had pledged if he wins the White House that he would help homeowners facing foreclosure on their mortgages. He also pledged to support changes in the bankruptcy law to make it less burdensome on consumers.

Obama's rival, Republican Sen. McCain, announced a brief suspension in his campaign more than a week ago to try and help solve the financial crisis.

Republican Rep. Sue Myrick of North Carolina, who switched her vote to favor the measure, said, "I may lose this race over this vote, but that's OK with me. This is the right vote for the country."

Myrick said she hadn't heard from McCain as she made up her mind about how to vote. "They told me he was going to call me. He didn't," she said.

The vote on Monday had staggered the congressional leadership and contributed to the largest one-day stock market drop in history, 778 points as measured by the Dow Jones Industrials.

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Associated Press writers Jim Abrams, Charles Babington, Alan Fram, Suzanne Gamboa, Kimberly Hefling, Andrew Miga, Andrew Taylor, and Erica Werner contributed to this story.

Bush urges House to approve bailout plan

www.chinaview.cn 2008-10-03 04:18:30  

·Bush said the crisis in the financial markets "has gone way beyond Wall Street." ·"This is an issue that's affecting hardworking people," Bush told reporters. ·"The House of Representatives must listen to these voices and get this bill passed."

    WASHINGTON, Oct. 2 (Xinhua) --

U.S. President George W. Bush on Thursday urged the House to approve the revised financial bailout plan late this week, saying the crisis in the financial markets "has gone way beyond New York and Wall Street."

    "This is an issue that's affecting hardworking people," Bush told reporters after meeting with more than a dozen manufacturers and business owners from across the country.

    "They're worried about their savings, they're worried about their jobs, they're worried about their houses, they're worried about their small businesses," he said.

    "The House of Representatives must listen to these voices and get this bill passed so we can get about the business of restoring confidence," he added.

    The House on Monday rejected the original financial rescue legislation, sending markets plunging around the globe.

    Under the rescue bill, the federal government will be authorized to purchase these assets from banks and other financial institutions, which is expected to help free them to resume lending to businesses and consumers.

    The new version approved by the Senate on Wednesday will raise federal deposit insurance limits to 250,000 dollars from 100,000 dollars per account, as suggested by the two White House hopefuls a day ago.

    Another big change is the introduction of a 10-year, 150.5 billion dollars package of tax proposals, including measures to ease the bit of the so-called alternative minimum tax and R&D tax credits coveted by high-tech companies and drug makers.

    The change in the bill were quantifiable, the initial proposal from the Treasury Department ran three pages, while the latest version exceeds 450.

    As the shape of the new bill became clearer on Wednesday, some lawmakers in the House indicated that they might change their minds.

    Representative John Shadegg of Arizona, who voted against the original bill on Monday, told a Phoenix radio station Wednesday that he'd be "inclined to vote for the bill" after the changes.

    When asked if was ready to switch from no to yes, Representative Steve LaTourette reacted cautiously: "Not yet, but it's getting there." 

U.S. Senate approves financial bailout plan

www.chinaview.cn 2008-10-02 09:19:14  

    WASHINGTON, Oct. 1 (Xinhua) --

The U.S. Senate on Wednesday approved a revised 700-billion-dollar bailout plan, which will authorize the U.S. government the largest financial intervention since the Great Depression.

    The bailout plan, which was passed by a vote of 74-25, was approved after a package of tax breaks for businesses, energy and the middle class, and an increase in bank deposit insurance were added in.

    Under the new bill, the federal government will be authorized to purchase the assets from banks and other financial institutions, which is expected to help free them to resume lending to businesses and consumers.

    The new version approved by the Senate will raise federal deposit insurance limits to 250,000 dollars from 100,000 dollars per account, as suggested by the two White House hopefuls a day ago.

    Another big change is the introduction of a 10-year, 150.5-billion package of tax proposals, including measures to ease the bit of the so-called alternative minimum tax and R&D tax credits coveted by high-tech companies and drug makers.

    The change in the bill were quantifiable, with the initial proposal from the Treasury Department running three pages while the latest version exceeding 450.

    The measure now goes to the U.S. House of Representatives for a vote that is likely on Friday.

    The Bush Administration and key lawmakers warned earlier that economic crisis will become a full-fledged disaster if Congress rejects the rescue plan.

    "The Senate's going to take this bill up tonight, I'm hopeful they'll pass it, and then the House will have a chance to vote on it Friday morning," Bush told reporters at the end of meeting with Gen. David McKiernan, the top U.S. military commander in Afghanistan.

    "It's very important for members to take this bill very seriously," said the president, noting the legislation is needed "to stabilize the situation, so it doesn't get worse."

    His remarks came two days after the U.S. House of Representatives voted narrowly to reject the 700-billion-dollar financial rescue bill that the Bush administration and leading members of Congress had agreed was necessary.

    "The bill is different. It has been improved and I am confident it will pass," Bush said.

    Barack Obama, the Democratic presidential candidate, also urged the Senate to pass the bill. "This is what we need to do right now, to prevent the possibility of a crisis turning into a catastrophe," he said. "Let's do what's right for the country at this time, because the time to act is now."

    His Republican rival John McCain took the same position on the issue, urging his colleagues in the Senate to approve the plan. "If we fail to act, the gears of our economy will grind to a halt," he said.

    As the shape of the new bill became clearer on Wednesday, some lawmakers in the House indicated that they might change their minds.

    Representative John Shadegg of Arizona, who voted against the original bill on Monday, told a Phoenix radio station Wednesday that he'd be "inclined to vote for the bill" after the changes.

    When asked if was ready to switch from no to yes, Representative Steve LaTourette reacted cautiously. "Not yet, but it's getting there," he said.

Editor: Jiang Yuxia