Senate Approves $700B Financial Bailout

Economic Rescue Legislation Passes 74-25; House Expected To Vote Friday; Support Growing

(CBS/AP)  After one spectacular failure, the $700 billion financial industry bailout found a second life Wednesday, winning lopsided passage in the Senate and gaining ground in the House, where Republicans opposition softened.

Senators loaded the economic rescue bill with tax breaks and other sweeteners before passing it by a wide margin, 74-25, a month before the presidential and congressional elections.

In the House, leaders were working feverishly to convert enough opponents of the bill to push it through by Friday, just days after lawmakers there stunningly rejected an earlier version and sent markets plunging around the globe.

Bipartisan supporters rallied around a unity theme - a stark contrast to the political bickering that marked Monday's shocking House defeat, reports CBS News correspondent Bob Orr.

The measure didn't cause the same uproar in the Senate, where both parties' presidential candidates, Republican John McCain and Democrat Barack Obama, made rare appearances to cast "aye" votes, as did Obama's running mate, Sen. Joe Biden of Delaware.

In the final vote, 39 Democrats, 34 Republicans and independent Sen. Joe Lieberman of Connecticut voted "yes." Nine Democrats, 15 Republicans and independent Sen. Bernie Sanders of Vermont voted "no."

President Bush issued a statement praising the Senate's move. With the revisions, Mr. Bush said, "I believe members of both parties in the House can support this legislation. The American people expect and our economy demands that the House pass this good bill this week and send it to my desk."

The rescue package lets the government spend billions of dollars to buy bad mortgage-related securities and other devalued assets held by troubled financial institutions. If successful, advocates say, that would allow frozen credit to begin flowing again and prevent a deep recession.

Wall Street was down around 20 points during a relatively calm day of trading as investors awaited the Senate's decision.

Even as the Senate voted, House leaders were hunting for the 12 votes they would need to turn around Monday's 228-205 defeat. They were especially targeting the 133 Republicans who voted "no."

Their opposition appeared to be easing after the Senate added $110 billion in tax breaks for businesses and the middle class, plus a provision to raise, from $100,000 to $250,000, the cap on federal deposit insurance.

They were also cheering a decision Tuesday by the Securities and Exchange Commission to ease rules that force companies to devalue assets on their balance sheets to reflect the price they can get on the market..

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Read CBS poll on the economic bailout plan

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There were worries, though, that the tax breaks would cause some conservative-leaning "Blue Dog" Democrats who voted for the rescue Monday to abandon it. The bill doesn't designate a way to pay for many of the tax cuts, and Blue Dogs typically oppose any measure that swells the deficit.

"I'm concerned about that," said Rep. Steny Hoyer, D-Md., the majority leader.

Raising the deposit insurance limit - along with the SEC's accounting change - helped House Republicans claim credit for some substantive changes. And with constituent feedback changing dramatically since Monday's shocking House defeat and the corresponding market plunge, lawmakers' comfort level with the package increased markedly.

Rep. John Shadegg, R-Ariz., who voted "no" on Monday, said he was leaning toward switching, and Rep. Steve LaTourette,R-Ohio, said he was "getting there." Several others were weighing a flip, said Republican officials who spoke on condition of anonymity because the lawmakers had not yet announced how they would vote.

Leaders in both parties, as well as private economic chiefs everywhere, said Congress must quickly approve some version of the bailout measure to start loans flowing and stave off a potential national economic disaster.

"This is what we need to do right now to prevent the possibility of a crisis turning into a catastrophe," Obama said on the Senate floor. In Missouri, before flying to Washington to vote, McCain said, "If we fail to act, the gears of our economy will grind to a halt."

Critics on the right and left assailed the rescue plan, which has been panned by their constituents as a giveaway for Wall Street, and has little obvious direct benefit for ordinary Americans.

Sen. Jim DeMint, R-S.C., a leading conservative, said the step was "leading us into the pit of socialism."

Sanders, a self-described socialist, said the rescue was fundamentally unfair.

"The masters of the universe, those brilliant Wall Street insiders who have made more money than the average American can even dream of, have brought our financial system to the brink of collapse," Sanders said, and are demanding that the middle class "pick up the pieces that they broke."

Still, proponents argued that the financial sector's woes were already being felt by ordinary people in the form of unaffordable credit and underperforming retirement savings and without the bailout would soon translate into even more economic pain for working Americans, including more job losses.

"There will be no balloons or bunting or parades," when the rescue becomes law, said Sen. Chris Dodd, D-Conn., the Banking Committee chairman. But lawmakers will have "the knowledge that at one of our nation's moments of maximum economic peril, we acted - not for the benefit of a particular few, but for all Americans."

Sen. Judd Gregg, R-N.H., said the intense, at times contentious, 11-day round of bipartisan talks to craft the bailout - which followed dire warnings of impending economic meltdown from Bush's economic chiefs to congressional leaders - was an "extraordinary experience."

"This is the way government's supposed to work, folks, and it did," Gregg said.

The Senate specializes in high-stakes legislating by enticement, and the long list of sweeteners it added was designed to attract votes from various constituencies.

In addition to extending several tax breaks popular with businesses, the bill would keep the alternative minimum tax from hitting 20 million middle-income Americans and provide $8 billion in tax relief for those hit by natural disasters in the Midwest, Texas and Louisiana.

Tax cuts new and old are favorites for most House Republicans. Help for rural schools was aimed mainly at lawmakers in the West, while disaster aid was a top priority for lawmakers from across the Midwest and South.

Another addition, to extend the deductibility of state and local taxes for people in states without income taxes, helps Florida and Texas, among others.

Increasing the deposit insurance cap was a bid to reassure individuals and small businesses that their money would be safe if their banks collapsed. It was particularly geared toward small banks that fear customers will pull their money and park it in larger institutions seen as less likely to fold.

The FDIC would be allowed to borrow unlimited money from the Treasury Department through the end of next year as a way to cover the increased insurance limit. If used, it would be the first time the agency has tapped Treasury for a loan since the early 1990s.

The rescue bill hitched a ride on a popular measure that gives people with mental illness better health insurance coverage. Before passing it, senators voted by an identical 74-25 margin to attach the massive bailout and the tax breaks.

[guysdigdirt]

Who caused this mess in the first place?

Go to NY Times at

http://query.nytimes.com/search/sitesearch

search for;
Fannie Mae Eases Credit To Aid Mortgage Lending

Pick the first article and read the 3rd paragraph.

His actions still haunt us.

[praiseallah1]

Bill O''Reilly freaks out at Congressman Barney Frank over his role in the Fannie/Freddie scandal which caused our current economic crisis! It''s HILLARIOUS!

Go watch these videos documenting the fraud of our elected officials http://wallstreetmarketnews.blogspot.com

[hjedtyj]

Bush/Cheney called 800 Battalions to harass Remaining House Members to Vote for Bailout Tomorrow!!

Just heard this - hot off the press at 9:30pm, Thursday night!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

Will Bush/Cheney start WW III over this? We know they have been itching to start a war to counter/cancel November''s elections so they can stay in power for the past year. Is this it?

The House members whom voted against are those who represent poor and low income areas throughout the country and areas that do not benefit from bailout. They are enough in numbers to make a difference in Monday''s voting. Let''s keep supporting them!!!

Pass this around to others so they know they have and are supported by the public!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

[whodotcom]

800 billion dollars = $400,000 for every adult with a social security number 18 and over.

WOW, seniors could retire, really.
College students could pay for college.
Goverment could tax it at 50% and get half of it back immediately.
State Governemnt could get $40,000
Local government gets $4,000

What would retirees do with $156,000 after taxes?
go traveling abroad
buy stuff
buy stuff from other countries.
Not have to eat dog food.
Not have to live with their selfish children.
Kick that retirement home to the curb.
Live anywhere they want.

Single moms could afford day care, college, tennis shoes, food, good place to live, their dignity

Tell you what they would not have to do, keep asking their dead beat x for money which he could care less about help the children he fathered.

Rich people, what would they do, re-invest, buy expensive stuff. Pay their taxes with the money.

What would working couples do
Save for their children
Feed their children
Cloth their children
Re-finance their home
Buy a car that gets 40 miles per gallon

Who would loose, fat, undeserving white men on Wall Street. But they would also get $400,000 each.

How do we finance this, China is ready to buy bonds, Europe is ready to buy bonds, Rich Arabs are ready to buy bonds, every country is ready to buy bonds to help the US.

We fall they fall

Where would we spend the money? buy more stuff from China, take a trip to Europe, buy more oil and gas to heat our homes.

[praiseallah1]

The Bailout Tick you off too?

Do something about it before it''s too late! Email your Senator and Congressman and DEMAND they vote NO to Bush''s $700 Billion Bailout to Wall Street Firms! We taxpayers already paid Billions in bailouts for AIG, Bear Stearns and others firms and the market is still whole. Now Politicians come on TV saying the same rehearsed talking points to SELL this fraud to Mainstreet but if it''s so DIRE than WHY are leaders adding Billions in wasteful Pork to the Bill.

Go watch these videos documenting the fraud of our elected officials http://wallstreetmarketnews.blogspot.com/2008/10/democrates-defend-fanniefreddie-scam.html

[newsjunky5]

And the banks won''t lend you money until the House gives them the $700B.

[talk2chief]

It is time for Economic Darwinism.

Congress needs to decide if it represents the people or the dysfunctional corporate elites who deserve failure. Forget the failing operations that currently affect 401K''s, other well managed banks and financial institutions will lead, forget the lobby dollars and do the right thing and reject the bailout bill. Send a clear message to the top 1% of Americans, %u201CIf you fail, the taxpayer will no longer bail you out.%u201D

[gce65]

I''d be willing to bet most of those senators who voted against it are up for re-election in a month.

Look it up on the US Senate web site. It lists what class they are in (1, 2 or 3) which determines when their 6 years term is up. Then compare that to the roll call vote also on the Senate web site (recent bills/legislation).

[farnorth5]

Sorry to rain on your parade guys and gals,but observing from afar ,until the day comes when your Elected Representatives are elected by money received from the General Public instead of lobbyists,they will continue to show allegiance to the people providing the most money for reelection of themselves and their party.YOU CANT BLAME THE POLITICANS TOTALLY FOR THIS STATE OF AFFAIRS.

[nottellin1]

Our govenment is such a bunch of wimps ans liars. It seems to me that the we wouldn''t be in this mess if our banks had not loaned money to illegal alien invaders who have no stake in this country and no problem abandoning their mortgages. Talk about sub-prime!

[iresearch]

I would really like to see Sen. Frank and Sen. Dodd on Face The Nation.

[starleo146]

$6 million going to wooden arrows!!! What?!!

Posted by proisrael at 12:44 PM : Oct 02, 2008
+ report abuse

What is this wooden arrow thing anyway 6 million dollars I don''t understand how they got away with this this is something who wanted on that bill. Nascar are you kidding me how much do these drivers get for one race? let them chip in and pay for their Nascar. Unbelievable!!! I can''t even think of the other two ridiculous these threw me for a loop.they can''t help themselves pork is all they know and lost the art to govern vote them out.

[livewire190]

Hi. This is the, uh, President with a message to those that oppose this ,er, legislation.

Ya see, I,er, promised my base, y''''know, the guys with the money fer my campaigns, that I''''d, uh, make sure they didn%u2019t hafta pay fer their, uh, unfortunate choices ''''cause that''''s not the %u2019Merican way. Y''''see, those who aren''''t fer keepin'''' my base happy with the big tax cuts they like an'''' the special treatment they get that let''''s them make big piles a money is votin'''' against their intrests. Y''''see, if they don''''t get really, really, really rich, even though they maybe, uh, made some, er, I mean, made the unfortunate choices I mentioned before, won''''t have enough to trickle down all over the rest of you folks.

So let yer Congressman vote fer the bailou.., I mean rescue plan. And get ready to be trickled on by everyone of my supporters.

And God bless %u2018Merica



--------------------------------------------------------------------------------

Posted by ObservantX at 01:43 PM

lol

[t_barr]

Forbes.com
www.forbes.com/2008/10/01/goldman-morgan-run-oped-cx_nr_1002roubini.html

Part 1

Next: The Mother Of All Bank Runs?
''It''s plain that the current financial crisis is worsening in spite of, or perhaps because of, the Treasury rescue plan.

The strains in financial markets are becoming more, rather than less, severe in spite of the nuclear option of a $700B package: Interbank spreads are widening and are at a level never seen before; credit spreads are widening to new peaks; short term Treasury yields are going back to near zero levels as there is flight to safety; credit default swap (CDS) spreads for financial institutions are rising to extreme levels as the ban on shorting of financial stock has moved the pressures on financial firms to the CDS market; and stock markets around the world have reacted very negatively to this rescue package.

Financial institutions in the US and in advanced economies are going bust. In the US, the latest victims were Washington Mutual and Wachovia. In the UK, after Northern Rock and the acquisition of HBOS by Lloyds TSB, you now have the bust and rescue of Bradford & Bingley; in Belgium you had Fortis going bust and being rescued over the weekend; in Germany, Hypo Real Estate, a major financial institution near bust, has also needed rescue. So, this is not just a US financial crisis. It is a global crisis hitting institutions in the UK, the Euro-zone and other advanced economies (Iceland, Australia, New Zealand, Canada etc.).''

[t_barr]

Part 2

''The strains in financial markets, especially short-term interbank markets, are becoming more severe in spite of the Fed and other central banks having injected $300B of liquidity in the financial system last week alone, including massive liquidity lending to Morgan Stanley and Goldman Sachs.

In a solvency and credit crisis that goes well beyond illiquidity, no one is lending to counter-parties as no one trusts any counter-party (even the safest ones), and everyone is hoarding the liquidity that is injected by central banks. And since this liquidity goes only to banks and major broker-dealers, the rest of the shadow banking system has no access to this liquidity as the credit transmission mechanisms are blocked.

After the bust of Bear and Lehman, and the merger of Merrill with Bank of America, I suggested that Morgan Stanley and Goldman Sachs should also merge with a large financial institution that has a large base of insured deposits so as to avoid a run on their overnight liabilities. Instead, Morgan and Goldman took a cosmetic approach, converting themselves into bank holding companies as a way to get further liquidity support - and regulation as banks - from the Fed and as a way to acquire safe deposits.''

Read the rest at the link.

I have seen a number of other articles speaking about a coming Bank Holiday, maybe as early as Sat and lasting a week. You Will Not Have Access to Your Account. It''s a common Fact in the Market - He Who Panics First, Panics Best.

[observantx]

Hi. This is the, uh, President with a message to those that oppose this ,er, legislation.

Ya see, I,er, promised my base, y''know, the guys with the money fer my campaigns, that I''d, uh, make sure they didn%u2019t hafta pay fer their, uh, unfortunate choices ''cause that''s not the %u2019Merican way. Y''see, those who aren''t fer keepin'' my base happy with the big tax cuts they like an'' the special treatment they get that let''s them make big piles a money is votin'' against their intrests. Y''see, if they don''t get really, really, really rich, even though they maybe, uh, made some, er, I mean, made the unfortunate choices I mentioned before, won''t have enough to trickle down all over the rest of you folks.

So let yer Congressman vote fer the bailou.., I mean rescue plan. And get ready to be trickled on by everyone of my supporters.

And God bless %u2018Merica

[tibu987]

The only power the little guy has is his vote.

Use yours wisely.

Vote out of office the incumbents in the senate and congress.

If you are not part of the solution, you are part of the problem.

[tibu987]

I will not be voting for anyone in Washington that was a proponent for this bill or who voted for it.
In my case that means I will NOT be voting for Senator *** Durbin, Congressman Rahm Emanuel, Senator Barack Obama, and certainly not John McCain.

This bill (HR 3997) with the added pork amendments (over $100 billion) that had to be attached to make it palatable for the pols, is an insult, a slap in the face to every average American.

Never a fan of politicians, this one put me over the edge.
This was like rewarding the fox for killing the chickens.

Wall Street''s five largest firms paid MORE than $3 billion to top executives over five years while they preside over loans that helped bring down the investment-banking-mortgage lending system.

There is a Senate Committee on Banking, Housing, and Urban Affairs. Twenty one senators (11 Democrats, 10 Republicans), serve on this committee.
Uh, what is it exactly that they do?

As I said, I will not be voting for anyone who encouraged or voted for the passing of this bill. They do NOT represent me.

[t_barr]

Senate; You Taxpayers WILL Bailout our Buds in the Bankster Industry. We Will Force You. Resistance is Futile.

Taxpayer; OK, You Have Forced US. We Will Bailout ON the Banksters.

This is OUR best Defense. Remove their Precious Money, They cannot Survive without OUR money. They will be Forced into Bankruptcy Court, where ALL records WILL be FORCED to become Public. GAME OVER!

Perp-Walks... I want to see a massive number of Bankster Perp-Walks. They are the Guilty ones, Justice demands Bankster Perp-walks!

Oh, later on down the road, you can also vote these Traitorist Senators out of Office. The Bank Runs will yield almost immediate results...

[brianp55]

Senatorial scum. They are absolutely determined to give this money to these Wall Street firms, regardless of what their constituents want. They refuse to allow natural mechanisms to assimilate these "toxic" assets and diminish the financial burden. They seem to be absolutely driven to have the taxpayer assume ownership of as many of these bad assets as possible, even though most taxpayers had nothing to do with generating them. I hope these *** are recalled.