Friday, October 3, 2008

House Passes Bailout Bill, 263-171

The House passed the Wall Street Bailout Bill this afternoon by a vote of 263-171 and will send it to the president's desk in a matter of hours.

Democrats voted for the bill by 172-63. Republicans voted yes by a margin of 91-108.

President Bush said "When Congress sends me the final bill I'm going to sign it into law." He thanked both Democrats and Republicans for coming together on the legislation. He said there is protection for taxpayers and that the bill will ease the credit crunch.

House Speaker Nancy Pelosi (D-Calif.) said, "As we observe the passes of a serious piece of legislature, we must have an eye to the future." She put the blame on the crisis on the president's policy to deregulate the financial markets.

"We were able to make improvements in a bi-partisan way," Pelosi told reporters in a press conference on Capitol Hill. "Our eye is to the future to shine the bright light of accountability. [Rep. Barney] Frank will be holding hearings on where we go in the future."

Frank (D-Mass.) told the reporters that as of January, "We have to rewrite housing finance in this country. It would be a betrayal of our oath if we stopped here. It will be our job to enact a set of new regulations ... for all financial industry."

Rep. Brian Bilbray (D-Calif.) who voted against the bill, said, "the Senate does what it normally does, and that is to take a bill and turn it into a Christmas tree." He said he could not vote for the bill and answer to his constituents in his district. He described the increase in the national debt at $1.6 trillion because of the bill.

Rep. Steny Hoyer (D-Md.) took a shot at the Bush administration during the press conference saying the White House's financial policy put the nation into this situation. He then thank Frank for his work on the bill.

Rep. James E. Clyburn (D-S.C.), the House majority whip, said he hoped that the vote restored confidence in the government. He said improvements in the bill made by the Democrats, in consultation with Sen. Barack Obama, have made this "an incredible piece of legislation." Rep. Rahm Emanuel (D-Ill.), the Democrat caucus chair, said, "we have done what we needed to do. ... We must have an economic agenda to provide middle-class tax cuts and universal health care." He thanked Obama for making numerous calls to help get this bill passed.

The Associated Press reported on today's economic news:

If anything, the economic news added to the sense of urgency.

The Labor Department said initial claims for jobless benefits had increased last week to the highest level since the gloomy days after the 2001 terror attacks. Employers slashed 159,000 jobs from their payrolls, the most in five years. That came on top of Thursday's Commerce Department report that factory orders in August plunged by 4 percent.

The stock market opened higher on anticipation that the bill would pass, and the financial industry shakeout rolled on unpredictably.

Wachovia announced it had agreed to be acquired by San Francisco-based Wells Fargo & Co rather than by Citigroup. Executives said the new arrangement would keep the Federal Deposit Insurance Corp., on the sidelines, thus preventing any depletion of the government's fund that backs bank deposits.

The FDIC said it was sticking behind the Citigroup plan, leaving the fate of the bank in limbo.

The bill has grown since it was first proposed by the administration two weeks ago, but here's what it else it does, as reported by

--Provides the government with warrants to obtain an equity stake in companies. This helps ensure that taxpayers share in future gains of companies that are bailed out.

--Limits excessive executive compensation for some companies. Any firm that sells more than $300 million in troubled assets to the government is also subject to more taxes.

--Establishes an oversight board and special inspector general to act as a watchdog.

--Requires the Treasury secretary to regularly report to Congress the details of all financial transactions under the bailout.

--Allows federal agencies to modify troubled mortgage loans.

--Expands the amount of government insurance on individual bank deposits from $100,000 to $250,000.

--Gives the chairman of the Securities and Exchange Commission the authority to suspend mark-to-market accounting and requires the agency to complete a study on the effectiveness of this accounting method.

--Requires the president five years from now to devise a plan to recoup net losses, if there are any.

--Gives companies the opportunity to insure their troubled assets rather than selling them, although this is up to the discretion of the Treasury secretary.

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