It's just the beginning.
That's the message – from both sides of the aisle – after the House approved a historic $700 billion financial-rescue package.
While the initiative now shifts to the Treasury Department, armed with vast new powers to relieve stricken financial markets, Congress is launching its own, parallel oversight operation to ensure transparency and accountability in how these powers are used. It also has to meet vast new expectations on government's capacity to restore markets – and the lives of constituents – battered by the crisis.
Beginning next week, Congress is also starting a series of hearings and investigations – just weeks before national elections – to identify who is to blame for the worst financial crisis since the Great Depression. Democratic lawmakers want to use them as a springboard for rapid legislation next session to reregulate financial markets.
"Those who most opposed government intervention in the economy for much of the past two decades were so successful in keeping the government away from regulating activities that should have been regulated, that the consequence is now a greater degree of intervention by the government in the economy," said Democratic Rep. Barney Frank, chairman of the House Financial Services Committee, after Friday's vote.
For now, the focus is on the Bush administration, which has three months to show that the powers it said were essential can make a difference.
The new law gives the Treasury secretary other options, such as relying on insurance or loans to relieve the crisis. But over two weeks of congressional testimony and negotiations, Secretary Henry Paulson made the case that the key element in the plan is the power to buy up "troubled assets."
Step One is setting up a process for buying "toxic," illiquid assets, such as mortgage-backed securities, that clogged credit markets and helped drive giant financial institutions in the US and around the world toward bankruptcy.
"What we're going to see happen is the process of the auctions put into place to buy the securities from the banks. They will hire private companies to do that for them, because there isn't the capacity inside Treasury and they don't want to build one up. It can be managed by a couple of vendors," says Peter Morici, a professor at the University of Maryland School of Business and former chief economist of the US International Trade Commission.
But the process itself of sorting out assets in the new Troubled Assets Relief Program or TARP will be daunting, he adds. "Not all mortgage-backed securities have the same risk or potential default rate inside of these bonds. The real problem is telling which assets are alike so you can have a bidding process and set a price."
House leaders, rebuffed on Monday by members on both sides of the aisle, needed 12 votes for victory in a revote on Friday. They easily surpassed that to win by a vote of 263 to 171.
What changed is that members, swamped by calls from angry voters who opposed the rescue, this week began hearing from car dealers, small business owners, governors, and mayors who were worried about the impact of the credit crunch.
"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.
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.