US Senate passes bailout plan

October 2, 2008
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, WASHINGTON, October 2 – The US Senate has resoundingly passed a sweetened 700-billion-dollar Wall Street bailout, spurring hopes the House of Representatives would follow suit after killing an earlier bid to avert a world financial meltdown.

The Senate voted 74-25 late Wednesday to back the amended Bush administration bailout plan, designed to ease a deepening credit freeze and volatility on global stock markets spawned by the crisis on Wall Street.

Just over a month from election day, presidential candidates Barack Obama and John McCain also backed the effort, piling pressure on the House, which sent shockwaves around the world on Monday by rejecting the package.

President George W. Bush welcomed the passage of the bill, and called on the House to act in the next two days to avoid further damage to the US economy, amid conflicting signals over the bill\’s prospects.

"The American people expect and our economy demands that the House pass this good bill this week and send it to my desk," Bush said in a statement.

The Senate sweetened the original deal, which gives the US Treasury the power to buy up toxic mortgage debt choking the financial industry, to court conservative Republicans who helped block the original version in the House.

Senators raised the ceiling on federal insurance for bank deposits from 100,000 dollars to 250,000 dollars, and added up to 100 billion dollars in tax break extensions for middle class families and business.

They also retained the limits of "golden parachute" severance payments to disgraced Wall Street executives which were not in the original Bush administration plan.

Treasury Secretary Henry Paulson, who has worked for weeks to calm the raging financial crisis, also urged the House to "act promptly to pass the bill."

Senior Democratic Senator Max Baucus predicted the changes would be enough to win passage in the House, which is likely to take up the new bill on Friday.

"I think we have turned the corner tonight," Baucus said after the vote.

"I think the House will vote in favor of this legislation."

But Democratic House Majority leader Steny Hoyer had earlier sounded a note of caution, saying the bill would only be brought to a vote if it was certain to pass.

"If there is bipartisan, majority support for the Senate package, we will likely bring it to the floor on Friday," he said.

Senate Majority leader Harry Reid also talked up the bill\’s prospects.

"I would not move forward on this if I didn\’t think the chance in the House was good," Reid told reporters, and warned that a major US insurance firm, which he did not name, could go bankrupt without prompt congressional action.

Opponents of the bill in the House have expressed qualms about using vast amounts of taxpayer money to bailout Wall Street firms they blame for rash trading.

Some Democratic opponents of the bill have also demanded a companion stimulus package to help working Americans and those who risk losing their homes to foreclosure.

New talks were underway in the House meanwhile on tweaking the package to ensure it gets through on a second vote, after lawmakers sensationally killed off the original bill on Monday by 228 to 205 votes.

Hoyer raised concerns that some of his fellow Democrats who originally voted for the bailout might reject it over the Senate\’s extension of expired tax breaks.

"There\’s no doubt the tax package is very controversial. The Senate, in my opinion, is adding that on because they think that\’s the only way they can get it passed," Hoyer told NBC.

After the Senate vote, the chief Democratic bailout negotiator in the House Barney Frank told CNN the bill was still not a sure bet to pass.

"It\’s still uncertain; it is likelier to pass than before," Frank said.

Every House member is up for reelection on November 4, and many lawmakers in tight reelection fights opposed the unpopular package on Monday fearing for their seats.

But the subsequent plunge of stocks, which took many 401(k) market-based pension plans down with them, may have altered the political calculation.

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