Where is our money?
Senate Sets Bailout Vote, Sweetens Plan With Deposit Insurance
By James Rowley and Brian Faler
Oct. 1 (Bloomberg) -- The U.S. Senate set a vote for tonight on a $700 billion financial-rescue plan, tying it to an increase in bank-deposit-insurance limits and tax breaks to win support from Republicans.
The Senate agreed to vote on the legislation along with the measure temporarily raising the limit on federal deposit insurance to $250,000 from $100,000. That increase was proposed by Republicans critical of the plan authorizing Treasury Secretary Henry Paulson to buy troubled debt from lenders, which was rejected by the House on Monday.
Also linked to the legislation is a two-year extension of tax breaks that will save individuals and corporations about $149 billion over the next decade, another move popular among House Republicans. Two-thirds of House Republicans and 40 percent of Democrats defeated the bailout plan on a 228-205 vote. President George W. Bush and Senate leaders had vowed to revive the legislation.
The Senate is expected to pass the bill, with most Democrats and Republicans behind it. There's also increased optimism the House will go along, as pressure mounts on lawmakers to help restore confidence in the banking system.
After a week-long torrent of calls and e-mails from angry voters opposing the rescue package, the tide turned after markets plunged on Sept. 29 in response to the House vote.
``Over $1 trillion worth of market value was wiped off the books by the stock market drop,'' said Senator Robert Bennett, a Utah Republican. ``It is ordinary people looking at ordinary pensions, with their ordinary Main Street kind of 401(k) plans, who lost that $1 trillion. And they lost it in a matter of minutes.''
Sentiment Swings
Texas Republican Representative Joe Barton's office said constituent calls and e-mails swung to as much as 70 percent in favor of congressional action, after having been overwhelmingly against a taxpayer rescue of Wall Street.
The Dow Jones Industrial Average's record 778-point nosedive Monday ratcheted up pressure on Congress.
The flood of e-mails to Capitol Hill swamped congressional computers, slowing communications and Internet access, said Kyle Anderson, a spokesman for the House Administration committee. On Google Inc.'s search engine, ``bailout vote'' and ``House vote'' were the fifth- and sixth-most-searched terms on Sept. 29. ``Roll call vote'' and ``who is my congressman?'' also made the top 50.
House Minority Whip Roy Blunt, the Republicans' chief vote counter, predicted that voters' economic worries would force Congress to act. ``The impact this could have on the markets will have a big impact on getting people back to wanting to work together to get this problem solved,'' Blunt said.
Proud of Vote
To be sure, some lawmakers say their constituents are still opposed, and they have no regrets about killing the plan that was presented to the House. ``One of the best votes of my career,'' said Representative Peter DeFazio, an Oregon Democrat.
While voters jammed Capitol switchboards, lobbyists also stepped up pressure on Congress to do something. A collection of 56 trade groups -- from the U.S. Chamber of Commerce to the American Meat Institute and the National Roofing Contractors Association -- released an open letter urging Congress to act.
``Virtually every American has witnessed their retirement, investment and savings accounts decline steeply,'' the letter said. ``The evaporation of credit is affecting businesses of all sizes and consumers and we run the risk of further declines in housing values.''
Broad Power
The bank-rescue package would give the Treasury secretary broad power to buy troubled assets, chiefly mortgage-backed securities, that are burdening investors and financial institutions.
The Senate's final version of the legislation is still being drafted. Under the accord, announced on the Senate floor, Republican Leader Mitch McConnell and Majority Leader Harry Reid must still agree on the language before a vote can take place. It will be offered as an amendment to a piece of House-passed legislation awaiting Senate action and called up for a vote after 7:30 p.m. Washington time.
The tax package that's part of the legislation also includes $17 billion in tax credits for the development of solar, wind and other forms of renewable energy. It passed the Senate on a 93-2 vote last week and differs from a version the House also approved. The package would spare 24 million households from a $62 billion alternative-minimum tax that is due to take effect this year.
Blue Dogs
Fiscally conservative House Democrats known as Blue Dogs opposed the Senate bill because it wasn't fully offset by new tax revenue. The House version of tax breaks was paid for. Senate leaders refused to consider the House bill, saying it would never pass in that chamber. The financial rescue measure won support from 24 of the Blue Dogs on Monday.
House Democratic leaders reacted cautiously to last night's announcement of the Senate agreement. ``I am talking with my House colleagues about the Senate action and how to proceed,'' Majority Leader Steny Hoyer said in a statement.
At the White House, the president said yesterday he realized ``this is a difficult vote for members of Congress. But the reality is that we're in an urgent situation and the consequences will grow worse every day.''
To help restore confidence in the nation's lenders, FDIC Chairman Sheila Bair sought the temporary increase in the bank- deposit insurance limits. That move was endorsed by both Republican presidential nominee John McCain and Democratic rival Barack Obama. Both presidential candidates plan to return to Washington for tonight's vote, their aides said.
Reid said he's in contact with White House Chief of Staff Josh Bolten. He also said Obama informed him he talked to Bush about the plan. ``We're working together to try to resolve this,'' Reid said.
To contact the reporter on this story: James Rowley in Washington at [email protected]; Brian Faler in Washington at [email protected]
Last Updated: October 1, 2008 00:15 EDT
Senate Sets Bailout Vote, Sweetens Plan With Deposit Insurance
By James Rowley and Brian Faler
Oct. 1 (Bloomberg) -- The U.S. Senate set a vote for tonight on a $700 billion financial-rescue plan, tying it to an increase in bank-deposit-insurance limits and tax breaks to win support from Republicans.
The Senate agreed to vote on the legislation along with the measure temporarily raising the limit on federal deposit insurance to $250,000 from $100,000. That increase was proposed by Republicans critical of the plan authorizing Treasury Secretary Henry Paulson to buy troubled debt from lenders, which was rejected by the House on Monday.
Also linked to the legislation is a two-year extension of tax breaks that will save individuals and corporations about $149 billion over the next decade, another move popular among House Republicans. Two-thirds of House Republicans and 40 percent of Democrats defeated the bailout plan on a 228-205 vote. President George W. Bush and Senate leaders had vowed to revive the legislation.
The Senate is expected to pass the bill, with most Democrats and Republicans behind it. There's also increased optimism the House will go along, as pressure mounts on lawmakers to help restore confidence in the banking system.
After a week-long torrent of calls and e-mails from angry voters opposing the rescue package, the tide turned after markets plunged on Sept. 29 in response to the House vote.
``Over $1 trillion worth of market value was wiped off the books by the stock market drop,'' said Senator Robert Bennett, a Utah Republican. ``It is ordinary people looking at ordinary pensions, with their ordinary Main Street kind of 401(k) plans, who lost that $1 trillion. And they lost it in a matter of minutes.''
Sentiment Swings
Texas Republican Representative Joe Barton's office said constituent calls and e-mails swung to as much as 70 percent in favor of congressional action, after having been overwhelmingly against a taxpayer rescue of Wall Street.
The Dow Jones Industrial Average's record 778-point nosedive Monday ratcheted up pressure on Congress.
The flood of e-mails to Capitol Hill swamped congressional computers, slowing communications and Internet access, said Kyle Anderson, a spokesman for the House Administration committee. On Google Inc.'s search engine, ``bailout vote'' and ``House vote'' were the fifth- and sixth-most-searched terms on Sept. 29. ``Roll call vote'' and ``who is my congressman?'' also made the top 50.
House Minority Whip Roy Blunt, the Republicans' chief vote counter, predicted that voters' economic worries would force Congress to act. ``The impact this could have on the markets will have a big impact on getting people back to wanting to work together to get this problem solved,'' Blunt said.
Proud of Vote
To be sure, some lawmakers say their constituents are still opposed, and they have no regrets about killing the plan that was presented to the House. ``One of the best votes of my career,'' said Representative Peter DeFazio, an Oregon Democrat.
While voters jammed Capitol switchboards, lobbyists also stepped up pressure on Congress to do something. A collection of 56 trade groups -- from the U.S. Chamber of Commerce to the American Meat Institute and the National Roofing Contractors Association -- released an open letter urging Congress to act.
``Virtually every American has witnessed their retirement, investment and savings accounts decline steeply,'' the letter said. ``The evaporation of credit is affecting businesses of all sizes and consumers and we run the risk of further declines in housing values.''
Broad Power
The bank-rescue package would give the Treasury secretary broad power to buy troubled assets, chiefly mortgage-backed securities, that are burdening investors and financial institutions.
The Senate's final version of the legislation is still being drafted. Under the accord, announced on the Senate floor, Republican Leader Mitch McConnell and Majority Leader Harry Reid must still agree on the language before a vote can take place. It will be offered as an amendment to a piece of House-passed legislation awaiting Senate action and called up for a vote after 7:30 p.m. Washington time.
The tax package that's part of the legislation also includes $17 billion in tax credits for the development of solar, wind and other forms of renewable energy. It passed the Senate on a 93-2 vote last week and differs from a version the House also approved. The package would spare 24 million households from a $62 billion alternative-minimum tax that is due to take effect this year.
Blue Dogs
Fiscally conservative House Democrats known as Blue Dogs opposed the Senate bill because it wasn't fully offset by new tax revenue. The House version of tax breaks was paid for. Senate leaders refused to consider the House bill, saying it would never pass in that chamber. The financial rescue measure won support from 24 of the Blue Dogs on Monday.
House Democratic leaders reacted cautiously to last night's announcement of the Senate agreement. ``I am talking with my House colleagues about the Senate action and how to proceed,'' Majority Leader Steny Hoyer said in a statement.
At the White House, the president said yesterday he realized ``this is a difficult vote for members of Congress. But the reality is that we're in an urgent situation and the consequences will grow worse every day.''
To help restore confidence in the nation's lenders, FDIC Chairman Sheila Bair sought the temporary increase in the bank- deposit insurance limits. That move was endorsed by both Republican presidential nominee John McCain and Democratic rival Barack Obama. Both presidential candidates plan to return to Washington for tonight's vote, their aides said.
Reid said he's in contact with White House Chief of Staff Josh Bolten. He also said Obama informed him he talked to Bush about the plan. ``We're working together to try to resolve this,'' Reid said.
To contact the reporter on this story: James Rowley in Washington at [email protected]; Brian Faler in Washington at [email protected]
Last Updated: October 1, 2008 00:15 EDT
