House braces for second try at financial bailout plan

Washington – After gliding to victory in the Senate late Wednesday, the Bush administration’s proposed $700 billion financial rescue plan heads back to the House, where its prospects remain uncertain despite the inclusion of tax breaks and consumer perks designed to win over enough votes to push it through.

It was an anguished vote for senators. Many expressed misgivings about the bill even as they voted for it. But it is likely to be an even tougher vote for House lawmakers, each of whom is already on record as being for or against the plan - and most of whom are up for reelection in 33 days.

The House of Representatives just three days ago rejected an earlier version of the bill, stunning party leaders and driving down stock values worldwide on the day. The Senate version of the rescue legislation – which has been widely derided as a bailout of high-flying Wall Street CEOs – contains the same basic provisions as the defeated House bill, plus some tax-break extensions and extra guarantees for depositors.

Even so, this time the political forces appear to be aligning more favorably for the bill – and the world, along with Main Street USA, is watching.

As the Senate took up the issue Wednesday night, news crews spilled out into the corridors and the public jammed available galleries. The final vote was 74 to 25 in favor. Presidential hopefuls John McCain and Barack Obama both voted for the measure, as did Democratic vice-presidential candidate Joseph Biden.

“We’ve sent a clear message to all America that we will not let this economy fail,” said Senate majority leader Harry Reid, after the vote.

The changes in the Senate version of the bill came down to two points aimed less at the Senate, where passage of the plan had been expected, than at the House.

One provision in the revised Senate plan would raise the Federal Deposit Insurance Corp.’s (FDIC) limit for insuring individual bank accounts from $100,000 to $250,000. The move aims to boost confidence in financial markets and enjoys broad bipartisan support in both chambers.

But the second major revision, a $110 billion package of tax extensions, is one of the most bitterly divisive issues in the 110th Congress. Backers of the rescue plan say it's this very divisiveness, ironically, that could change the calculus of votes in the House and secure victory in a vote expected by Friday.

“We’re optimistic. And I think a good vote coming out of the Senate will certainly be helpful over in the House side,” said Republican Senate leader Mitch McConnell on Wednesday.

After the Senate vote, House speaker Nancy Pelosi released a statement, pledging that "the House will act in a bipartisan way to restore market confidence as well as Main Street’s confidence in our economic future."

The proposed rescue plan provides as much as $700 billion for the Treasury secretary to buy "troubled assets" from financial institutions, including foreign banks doing business in the United States. Congressional negotiators added other features: oversight, curbs for excessive executive compensation, and an option – urged by House Republicans – for the Treasury secretary to solve the problem through insurance and loans, rather than purchase of assets.

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