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Congress's financial rescue plan is first step

Democrats will use credit-crisis hearings this month as a springboard for more regulation next year.

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"Over the last few days, a lot of members heard from Main Street businesses who are experiencing the front end of this credit crisis," says Rep. Paul Ryan (R) of Wisconsin, who says he expects to take a hit politically for his support of the bill, which is still highly unpopular with many Americans. "It's just beginning to sink in how dire this moment is.... Now, the public hasn't seen that yet." Calls from his constituents are still running 85 percent opposed, he said.

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In the end, 91 Republicans voted with 172 Democrats to back the plan, up from 65 Republicans in the first vote on the plan on Monday.

During the floor debate, Rep. Zoe Lofgren (D) of California said that, due to the credit crisis, "the state of California will not be able to meet payroll by the end of the month" if Congress fails to act.

Democratic leaders also got more votes for the plan on Friday, thanks in part to commitments they made to black and Hispanic members that federal resources will be directed to help homeowners at risk of foreclosure.

"Today was a day that I changed my mind, after talking to a considerable number of persons who indicated to me that they were having trouble with credit concerns," said Rep. Al Green (D) of Texas. Another deciding factor was assurances from Representative Frank that Democrats will "work very hard" to make sure that mortgages purchased by a reorganized Fannie Mae and Freddie Mac will be restructured so that homeowners can stay in their homes.

After signing the historic legislation on Friday, President Bush commended House leaders of both parties, "We have acted boldly to help prevent the crisis on Wall Street from becoming a crisis across the country," he said.

While most lawmakers are returning home to campaign this week, Congress could be called back into session, if necessary, as early as Monday. Meanwhile, congressional panels are gearing up for an unusual series of oversight hearings over the break, including the causes and effects of the bailout of American International Group (AIG) insurance company (next Monday) the bankruptcy of Lehman Brothers investment bank (Tuesday), the impact of the financial crisis on workers' retirement security (Tuesday), the regulation of hedge funds (Oct. 16), and the breakdown of credit-rating agencies (Oct. 22).

"The eye now is to the future: To shine the bright light of accountability on what is happening in our financial markets so that it doesn't happen again," said House Speaker Nancy Pelosi, after the vote. Upcoming committee hearings "will tell us how we got to this place and ferret out the abuses," she added.

Republicans, meanwhile, are urging investigations into why Democrats over the years blocked GOP measures to curb mortgage giants Fannie Mae and Freddie Mac, now operating under a federal conservatorship.

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