Hopes rise in Congress for bailout package

October 1, 2008

, WASHINGTON, October 1 – Shellshocked leaders in Congress said Tuesday they could pass a revised 700 billion dollar Wall Street bailout within days, after their first attempt failed, sparking fears of economic catastrophe.

Top Democratic and Republican leaders consulted one another and Bush administration officials a day after the political storm and stockmarket rout set off by the House of Representatives\’ shock vote on Monday.

Democratic Speaker Nancy Pelosi and the top Senate Democrat Harry Reid told President George W. Bush in a letter that they would keep working with him to revive the bill, which fell by 228 votes to 205 in the House.

"Working together, we are confident we will pass a responsible bill in the very near future," they said.

Chris Dodd, chairman of the Senate Banking Committee, said leaders in both chambers were working on the timing of bringing amended bailout legislation up for a vote.

"I am quite confident that we are moving in the right direction, and that we should end up with a very positive outcome in the next 24 or 48 hours," Dodd said.

"I do know that some of those who cast votes yesterday are having second thoughts about the situation that they placed us in."

Former Democratic presidential candidate John Kerry said meanwhile that the Senate may even take up the revised bill as early as Wednesday evening, before the House, in a reversal of normal practice for a revenue bill.

"It is even possible that the US Senate may proceed with this tomorrow night, that has not yet been decided, that is one of the options on the table," Massachusetts Senator Kerry said at a press conference.

The House does not resume business until Thursday, after the Jewish holiday of Rosh Hashanah, but Reid has said some Senate votes could be held on Wednesday after sundown.

Earlier, Reid has told his colleagues "the blame game needs to end," referring to fierce recriminations which erupted after the House vote.

Reid\’s Republican counterpart Senator Mitch McConnell warned lawmakers to stop "finger pointing."

"This financial crisis is going to be dealt with by Congress and it\’s going to be dealt with by Congress this week."

Reid later held a meeting with senior Democrats while McConnell huddled with top Republican Senate leaders.

In the first glimmer of hope for a breakthrough, House Republican leader John Boehner backed a suggestion by White House rivals Barack Obama and John McCain that Federal Deposit Insurance Corporation (FDIC) deposit protection be extended to from 100,000 dollars to 250,000 dollars.

"The presidential candidates\’ support for increasing the FDIC cap is welcome news," Boehner said in a statement, accusing the Democrats of rejecting the idea in earlier bailout negotiations.

Republican leaders have said that raising the cap may convince some more of their number to reverse their votes and support the bailout.

But Democratic rebels who joined in an unusual alliance with conservative Republicans to scupper the bailout bill, agreed in intense weekend talks with Bush aides, warned they would not change their mind.

"I have no regrets about doing my job," said Maryland Democratic congressman Elijah Cummins, saying he voted against the 700 billion dollar rescue plan because it gave no help to constituents facing mortgage foreclosures.

Oregon Democrat Peter DeFazio called on the Bush administration to fund an alternative bailout plan using money drawn from Wall Street itself and not the taxpayer.

"I have no regrets, that is one of the best votes of my career," he said.

Earlier, Bush, his power ebbing with the end of his second term just four months away, pleaded with lawmakers to accept that inaction would deepen the US financial crisis.

"The reality is that we are in an urgent situation, and the consequences will grow worse each day if we do not act," he said.

The proposal would have given Treasury Secretary Henry Paulson authority to buy up toxic mortgage-related assets in troubled banks in hopes of easing the flow of credit and reviving the moribund housing market.

The bill would have immediately released 250 billion dollars to enable the government to buy up troubled assets, and sets a ceiling for all purchases of 700 billion dollars.

It also prohibits "golden parachutes" for CEOs or other executives who lose or leave their jobs at companies participating in the plan as long as the Treasury holds equity in those firms.

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