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House approves historic bailout package

October 3rd, 2008 11:13 AM by Lehel Szucs

House approves historic bailout package

Vote clears way for Bush's signature of $700 billion plan

By Robert Schroeder, MarketWatch
Last update: 1:33 p.m. EDT Oct. 3, 2008
WASHINGTON (MarketWatch) -- The U.S. House of Representatives voted to approve a revised $700 billion bailout plan for the financial markets Friday, just four days after rejecting the original version and clearing the way for President Bush to sign the historic package.
The House's vote follows the Senate's approval on Wednesday and gives the Treasury secretary extraordinary power to buy bad assets from financial companies, boosts federal bank insurance and requires the government to modify some mortgages. It also contains a host of controversial tax breaks and some caps on executive pay.
House lawmakers voted 263 to 171 to pass the bill, reversing the chamber's rejection of it on Monday, which sent the Dow Jones Industrial Average into a record 777-point freefall.
House leaders were cautiously optimistic before the vote, but uncertainty over its fate lingered until the last minute. Many members said the bill wasn't perfect but that action was needed to get the flow of credit going again and to help taxpayers.
"If we don't act now, those who are least to blame for this mess will suffer the most," said Rep. Judy Biggert, R-Ill.
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Democrats also warned that the economy would suffer without passage of the bill.
"We are facing an abyss," said Rep. Paul Kanjorski of Pennsylvania, who chairs a House Financial Services subcommittee on capital markets. "The urgency is clear," added House Speaker Nancy Pelosi. "We are addressing the real pain felt by Mr. and Mrs. Jones on Main Street," she said, in contrast to the Dow Jones Industrial Average and Wall Street.
The Senate approved the bill on Wednesday night by a vote of 74 to 25 following the 228 to 205 defeat on Monday in the House.
Core of plan remains same
The core of the plan authorizes the Treasury secretary to buy as much as $700 billion in bad assets from financial companies in a bid to get credit flowing to consumers and businesses. It allows the Federal Deposit Insurance Corp. to raise its deposit-insurance cap to $250,000 from $100,000 and also requires government agencies to modify troubled mortgages. The bill allows regulators to suspend certain accounting rules for securities that some argue have contributed to the credit crisis.
Stocks bounced back after two days of losses Friday morning, despite a government report that the U.S. economy lost 159,000 jobs in September, the worst decline in five years. See Market Snapshot.
Earlier this week, House Republican Leader John Boehner said on Fox News that the drop in the Dow had a "chilling" effect on many House members and their constituents.
President Bush called about three dozen House members Thursday, the White House said. He heard from some members that they would switch their "no" votes, according to White House spokesman Tony Fratto.
On Monday, only 65 Republicans had supported the White House plan while 133 voted against it.
Some dissenters remained unmoved on Friday, however, such as Rep. David Dreier, R-Calif., who said Friday morning on the House floor that he wasn't going to give Treasury Secretary Henry Paulson "a blank check."
Meanwhile, a leading House Democrat said that the bill was just the first step in repairing the financial markets.
"We will be back next year to do some serious surgery on the financial structure," said Rep. Barney Frank, D-Mass., who chairs the House Financial Services Committee. End of Story
Robert Schroeder is a reporter for MarketWatch in Washington. MarketWatch reporter Greg Robb contributed to this story.
Posted in:General
Posted by Lehel Szucs on October 3rd, 2008 11:13 AM

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