WASHINGTON, Sept. 30, 2008
Senate Schedules New Bailout Vote
Revised Plan Will Be Considered Wednesday; Wall St. Rebounds One Day After Historic Loss
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Rolando Gamez sweeps up litter on Wall St. in front of the New York Stock Exchange, Sept. 30, 2008 in New York. (AP Photo/Mark Lennihan)
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Traders Anthony Alvarino, left, Ed Curran, third left, and Steve Schnibbe, right, share a laugh on the New York Stock Exchange floor, Sept. 30, 2008. (AP Photo/Richard Drew)
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In a stunning vote that shocked the capital and worldwide markets, the House on Monday defeated a $700 billion emergency rescue for the nation's financial system, ignoring urgent warnings from President Bush and congressional leaders of both parties that the economy could nosedive without it. (AP Photo/Susan Walsh)
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Rep. Todd Platts, R-Pa., is cheered by demonstrators after he informs them he will cast a "no" vote on his way to vote on the financial bailout package Monday, Sept. 29, 2008, on Capitol Hill in Washington. (AP Photo/Lauren Victoria Burke)
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Senate Banking Committee Chairman Chris Dodd, D-Conn., left, and Sen. Jon Kyl, R-Ariz., right, hold a news conference on the failed vote in the House of Representatives on the financial bailout package on Capitol Hill in Washington, Monday, Sept. 29, 2008. (AP Photo/Susan Walsh)
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Play CBS Video Video The Heat Is On With no new financial bailout deal in place and Congress in recess to observe Rosh Hashanah, the pressure intensifies to reach an agreement as Election Day draws near. Bob Orr reports.
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Video Credit Freeze Hard On Wall St. Although the Dow enjoyed a comeback, many on Wall St. are on edge because the credit markets remain frozen. Anthony Mason reports.
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Video Notebook: Congress Breaks Congress has taken a break for the Jewish New Year and that is probably a good thing, says Katie Couric. During the recess, behind-the-scenes negotiations can take place on the bailout bill.
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Interactive Eye On The Economy In-depth features on U.S. markets, taxes, employment and the Federal Reserve.
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Timeline Credit Crunch Feeling the squeeze? Here's a look at actions and statements from key players in Washington.
The goal is to net at least 12 more House votes than the rescue proposal received Monday, when lawmakers rocked the political and financial worlds by rejecting it.
The gambit is certain to anger some conservative House Democrats, who object to tax cuts that are not offset with spending cuts. But Senate strategists assume it will gain more House votes than it will lose.
If so, Congress would be poised to pass landmark legislation giving the government billions of dollars to buy deeply discounted mortgage-backed securities that are choking off credit and roiling the markets.
The strategy is risky because some House members might see it as a high-handed move by senators. Senate passage of a bailout measure has seemed assured all along. The showdown is in the House, but now the Senate is trying to force the House's hand.
Sen. Charles Schumer, D-N.Y., called it "a brilliant move" that will "help pick up votes on both sides of the aisle."
House Speaker Nancy Pelosi's reaction was much cooler. "The Senate has made a decision about how to proceed and what can pass that body," the California Democrat said. "The Senate will vote tomorrow night, and the Congress will work its will."
The new approach, announced Tuesday night by Senate Majority Leader Harry Reid, D-Nev., and Minority Leader Mitch McConnell, R-Ky., would tack large and contentious tax measures to the bailout bill. Senate leaders figure the House will have to approve it because the tax cuts are too appealing to Republicans and the financial rescue plan will still seem essential to most Democrats.
The Senate approach uses big, game-changing amendments. House leaders earlier were considering the smallest possible tweaks to the bill in hopes of picking up 12 more votes. The previous compromise agreement met stiff opposition in the House, with many lawmakers facing fierce opposition to any bailout deal from their constituents.
Just a day after Republican Joe Barton helped kill the bailout bill in Congress, he returned home to his rural Texas district where he received support from his constituents, reports CBS News correspondent Bob Orr.
"I think we just ought to start over and come up with a plan that puts the taxpayer first," Barton told CBS News.
The Senate bill would raise federal deposit insurance limits to $250,000 from $100,000, as called for presidential nominees Barack Obama and John McCain only hours earlier.
House Minority Leader John Boehner, R-Ohio, praised the move, but many Democrats had signaled approval as well.
McCain, Obama and Sen. Joe Biden of Delaware, the Democratic vice presidential nominee, signaled plans to return to Washington for the Wednesday night vote. If Obama and Biden vote for the measure, it would make it more difficult for Pelosi and other Democrats to reject or change the Senate measure.
The Senate measure will graft the bailout language to a tax bill it approved last week, on a 93-2 vote. It includes: a provision to prevent more than 20 million middle-class taxpayers from feeling the bite of the alternative minimum tax, $8 billion in tax relief for those hit by natural disasters in the Midwest, Texas and Louisiana and some $78 billion in renewable energy incentives and extensions of expiring tax breaks.
(AP Photo/Charles Dharapak)
In a compromise worked out with Republicans, the bill does not pay for the AMT and disaster provisions but does have revenue offsets for part of the energy and extension measures.
That wasn't enough earlier this year for the House, which insisted that there be complete offsets for the energy and extension part of the package.
The Senate version also may include a measure to require health plans for 51 or more employees to give equal treatment to mental health or addiction if they cover such illnesses. The House and Senate have passed similar mental health parity measures, but none has gone to Bush for his signature.
The surprise move capped a day in which supporters of the imperiled economic rescue fought to bring it back to life, courting reluctant lawmakers with a variety of other sweeteners including the plan to reassure Americans their bank deposits are safe.
Amid Tuesday's negotiations, Federal Deposit Insurance Corp. chairman Sheila Bair asked Congress for temporary authority to raise the limit on deposits by an unspecified amount. That could help ease a crisis of confidence in the banking system, Bair said.
She said the overwhelming majority of banks remain sound but an increase in the cap would help ease a crisis of confidence in the banking system as well as encourage banks to begin more lending.
Monday's House vote was a stinging setback to leaders of both parties and to Bush. The administration's proposal, still the heart of the legislation under consideration, would allow the government to buy bad mortgages and other deficient assets held by troubled financial institutions. If successful, advocates of the plan believe, that would help lift a major weight off the already sputtering national economy.
Bush renewed his efforts to save the bailout plan Tuesday, speaking with McCain and Obama and making another statement from the White House. "Congress must act," he declared.
Though stock prices rose, more attention was on credit markets. A key rate that banks charge each other shot higher, further evidence of a tightening of credit availability.
The rescue package was Topic A on the presidential campaign trail.
"The first thing I would do is say, 'Let's not call it a bailout. Let's call it a rescue,"' McCain told CNN. He said, "Americans are frightened right now" and political leaders must give them an immediate solution and a longer-term approach to the problem.
Obama issued a statement saying that significantly increasing federal deposit insurance would help small businesses and make the U.S. banking system more secure as well as restore public confidence.
Wall Street Rebounds On Bailout Hopes
Wall Street snapped back Tuesday after its biggest sell-off in years amid growing expectations that lawmakers will salvage a $700 billion rescue plan for the financial sector. But the seized-up credit markets where businesses turn to raise money showed no sign of relief.
The recovery in stocks wasn't unexpected as carnage on Wall Street often attracts bargain hunters, though questions remain about how investors will proceed. Without a bailout plan in place to absorb soured mortgage debt and other bad loans from battered banks, investors are left wondering what might restore confidence in lending.
Major stock indexes were almost a sideshow during the session, with the credit markets as the main event. A key rate that banks charge to lend to one another shot higher, a tightening of the availability of credit that could cascade through the economy.
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La. Senators: Vitter (Rep) Landrieu(Dem) and Cazayoux (Dem) are making folks here in Louisiana feel confident. Because all three of them have voted no to the Bail Out, twice already. And we have a great Governor (Bobby Jindall) who wisely chose to have nothing to say or do with the bail out. Maybe 4 years from now, if we still have any resemblance of a democracy, Bobby Jindall or someone like Ron Paul will run for president and the media as well as the "political experts" will SHUT UP and let America have some breathing room to vote freely for a change. And by the way. I have been emailing my Congress people not just to say no to the bail out but also to thank them for voting no. We should all contact our "Representatives" and thank them when they actually listen to us. They didn''t vote the way they were asked to. They could have just ignored us like Obama and McCain did.
Posted by ibsteve2u at 10:23 AM : Oct 01, 2008
You''re a complete and utter moron, and you''re grasping at straws.
If Fannie Mae, Freddie Mac, and the rest of the home lending industry had not been deregulated in the name of "affordable housing" (a.k.a. let''s lend money to individuals who can''t possibly pay it back),
NONE OF THIS MESS WOULD HAVE HAPPENED.
MAKE THEM PAY for letting the fat cats play.
Posted by txgrouch2006 at 10:03 AM : Oct 01, 2008
You sort of left out the part about how the Administration in fact tried to get Congress to turn Fannie Mae and Freddie Mac over to then-Treasury Secretary Snow, thus putting what - $1.5 trillion? - where this Administration could manipulate it.
People know enough about this Administration NOW that giving Treasury Secretary Paulson HALF of that amount - $700 billion - was rejected almost UNIVERSALLY by Reps and Dems alike.
The fact is the Democrats were smart to block a gang of theives, liars, and con artists from getting their hands on that amount of financial power.
Republican deregulation is the real answer to:
"Who let the dawgs out?"
But of course I do not expect the "Party of Responsibility" - the Republicans - to take responsibility for their actions; they have wisely never claimed to be the "Party of Truth".
Posted by banders6 at 08:19 AM : Oct 01, 2008
I just went to www.congress.org and send a Web Form to all three of my representatives to say NO BAILOUT.
Barney Frank is one who opposed closer regulation of Fannie Mae and Freddie Mac. Five years ago in a New York Times interview, he said more regulation would hurt the "affordable housing" agenda.
MAKE THEM PAY for letting the fat cats play.
Cut Baracks financial backers off at the knees, vote no bail out.
will make it tough for Pelosi and Reid
to vote against the bailout."
Right!,,,We got Pelosi and Reid as leaders,
who, before they lead, check to make sure
that they are following how their followers
wish to be lead.
Makes sense to me.
NO BAILOUT!
Or call their offices and clog the lines.
If we say NO and they ay YES the we say NO at re-election
1) Keep the people afraid
2) Keep the people de-moralized
3) Keep the people in debt and broke
These things and events will help to control the "common Man".
That''s what they are doing, right now !...Be sure to tell your elected official in D.C. to take this Rip Off / UNCONSTITUTIONAL BAIL OUT scam and shove it !