CQ TODAY ONLINE NEWS
– ECONOMIC AFFAIRS
Updated Sept. 30, 2008 – 8:46 p.m.
Senate Plans Vote on Financial Rescue Wednesday
By Bart Jansen, Benton Ives, Joseph J. Schatz and Jonathan Allen, CQ Staff
Senate leaders reached agreement Tuesday for a vote on a revised version of the $700 billion financial industry rescue.
But according to Senate leaders, the chamber plans to add its version of a tax extenders package, which could complicate matters in the House, where the financial bailout was defeated on Monday.The plan is also expected to include a boost in the FDIC deposit insurance limit, to $250,000.
Senate Banking Chairman Christopher J. Dodd , D-Conn., said he planned to offer an amendment to the financial rescue plan. Dodd said the amendment package had not been finalized, but he indicated it would not include anything that would jeopardize the measure’s prospects.
“Nothing will be included in this amendment that we’re not agreed on,” Dodd said, adding that no other major changes were expected to the financial rescue plan.
“Candidly, we’re trying to stick pretty much where we are,” he said.
Dodd said he and his colleagues would work through the evening finalizing the language. He said he had been in touch with House Minority Whip Roy Blunt , R-Mo., on Tuesday and they had discussed adding the FDIC language.
A Democratic aide said House Speaker Nancy Pelosi and Senate Majority Leader Hearry Reid spoke this evening about the Senate plan, but it was unclear if the House was involved in formulating the strategy.
“Senate Democrats and Republicans believe it is essential that we work quickly on this important legislation to restore confidence to our financial system and strengthen the economy,” Reid said. “We have worked in a bi-partisan way to do so, and it is my hope that with the improvements we have made to the Administration’s proposal, the Senate will pass this legislation tomorrow and the House of Representatives will follow suit soon thereafter.”
Asked about the legislation’s prospects in the House, following the package’s stunning defeat on Monday, Dodd said “I’m told there are people in the House having second thoughts.”
Earlier in the day, FDIC Chairwoman Sheila Bair called for an increase in the insurance level. Lawmakers from both parties, as well as both presidential candidates, have likewise said the limit should be raised.
There has been less resistance in the Senate than the House to the financial rescue. Reid said there would be a 60-vote threshold on the amendment and on the entire bill.
In addition, Sen. Bernard Sanders , I-Vt., will be allowed to offer an amendment that will receive a voice vote. Sanders has called for a 10 percent surtax on individuals earning at least $500,000 per year, in order to help pay for the plan.
“The Senate agreement lays out a way for us to complete the package in the Senate,” said Minority Leader Mitch McConnell , R-Ky.
Senate Plans Vote on Financial Rescue Wednesday
Congressional leaders of both parties worked throughout Tuesday with the White House on a new plan to get legislation passed this week to shore up the troubled financial system after the House defeated the bill Monday.
One idea embraced by both presidential candidates appeared to be gathering momentum: an increase in the insurance limits on bank accounts protected by the Federal Deposit Insurance Corp.
FDIC Chairwoman Sheila C. Bair said she will seek a temporary increase in the deposit insurance limit, currently set at $100,000. Sens. Barack Obama , D-Ill., and John McCain , R-Ariz., urged an increase to $250,000 per account, as did a number of other lawmakers.
“Unfortunately, there is an increasing crisis of confidence that is feeding unnecessary fear in the marketplace,” Bair said in a statement Tuesday. “To address this crisis of confidence, I do believe that it would be helpful for the FDIC to have the temporary ability to raise deposit insurance limits.”
“Unfortunately, there is an increasing crisis of confidence that is feeding unnecessary fear in the marketplace,” Bair said in a statement Tuesday. “To address this crisis of confidence, I do believe that it would be helpful for the FDIC to have the temporary ability to raise deposit insurance limits.”
As more ideas emerged for modifying the legislation to attract more votes, supporters stepped up their efforts to convince Americans that the crisis in the financial sector, particularly a growing scarcity of business credit, is a direct danger to them and their jobs, and that action is needed soon.
“We are working together to try to resolve this important issue,” Majority Leader Harry Reid , D-Nev., said, the morning after the House by 205-228 defeated a painstakingly crafted $700 billion bailout plan, sending the financial markets into a steep plunge.
House Majority Leader Steny Hoyer, D-Md., said, “I have already spoken with administration officials, as well as congressional Republican and Democratic leaders about what needs to be done moving forward, and I will continue those conversations today.”
One possibility under consideration was having the Senate vote first whenever a revised bailout bill is ready.
Sen. Kent Conrad , D-N.D., chairman of the Senate Budget Committee, said Tuesday, “Obviously, that’s a possibility. No decisions have been made . A lot of conversations are under way to determine the best course here.”
For the second day in a row, President Bush exhorted Congress to swallow its reservations and pass bailout legislation.
“I recognize this is a difficult vote for members of Congress,” Bush said. “Many of them don’t like the fact that our economy has reached this point, and I understand that. But the reality is that we’re in an urgent situation, and the consequences will grow worse each day if we do not act.”
He warned, “If our nation continues on this course the economic damage will be painful and lasting.”
Senate Plans Vote on Financial Rescue Wednesday
He acknowledged that the proposed $700 billion plan to allow the Treasury to buy up troubled assets from financial institutions was “a large amount of money.”
But Bush noted that the stock market plunge Monday, in the wake of the House vote, “represented more than a trillion dollars in losses,” much of it from the life savings, pensions and retirement accounts of ordinary Americans.
On Tuesday, the stock market rose, making up about better than half of its losses of the day before, as traders took heart from assurances that Congress still would act this week.
White House spokesman Tony Fratto said the administration was open to modifications of the failed plan as long as it continued to hew to the core principles laid out by Treasury Secretary Henry M. Paulson Jr.
“I don’t think we have to start all over. We do have a solution that will fix the problem, and that’s the original proposal that was made by Secretary Paulson,” Fratto said. “There are lots of good ideas that can help the financial services industry and our financial markets, and we’re going to look at all of those ideas.”
However, he was cool to an idea some have floated: shrinking the amount of money that would be authorized for the program.
“We think that’s the right number,” Fratto said. “Unless Secretary Paulson comes back and says it’s a different number. That was his expert, considered judgment of his team and other federal regulators and people who follow the markets.
Back to Work
Reid said he had spoken Tuesday morning with White House chief of staff Joshua B. Bolten and with Obama.
Both Obama and McCain spoke directly with Bush Tuesday morning as well. Their input and reactions could sway some votes in Congress.
Both urged swift action to increase insurance coverage from the Federal Deposit Insurance Corp., and the idea appeared all but certain to surface in a revised bailout bill — especially since Bair embraced it.
Obama said that while the current $100,000 guarantee is adequate for most families, “it is insufficient for many small businesses that maintain bank accounts to meet their payroll, buy their supplies, and invest in expanding and creating jobs.”
A House leadership aide said Tuesday’s discussions included both an expansion of FDIC insurance and a possible expansion of the unemployment insurance program.
Senate Plans Vote on Financial Rescue Wednesday
Christopher J. Dodd , D-Conn., chairman of the Senate Banking, Housing, and Urban Affairs Committee, said The Banking chairman said lawmakers were evaluating a temporary increase in FDIC insurance limits. “We’re certainly going to look at that,” he said.
Whatever changes negotiators decide upon will be worked out quickly, Dodd said.
“So then the question is how do we get from Point A to Point B in the next 24 to 48 hours that allows us to get done,” Dodd said.
Congressional leaders have not yet decided whether to launch their next attempt in the House or have the Senate go first. Support for the failed bill was much broader in the Senate all along.
Asked whether the Senate might go first, Finance Chairman Max Baucus , D-Mont., said Tuesday, “We could.”
Under the Constitution, tax bills must originate in the House. Although the bailout measure contains tax provisions, nothing would stop Baucus from pulling a House-passed tax bill out of his desk drawer and providing it to Senate leaders to use as vehicle for action on a financial rescue proposal.
Dodd said he has heard from colleagues “that a number of people who voted no yesterday are having serious second thoughts about it,” though he didn’t name names.
Substantial Resistance
But House members of both parties who voted against the bailout bill (
Rep. Marcy Kaptur , D-Ohio, interviewed on C-SPAN Tuesday morning, said lawmakers should slow down, involve more players in the drafting process and take more steps to help ordinary Americans. “This bill basically rewards bad behavior,” she said of the measure defeated by the House.
Lloyd Doggett , D-Texas, agreed: “I want Wall Street bailing Wall Street out. .... My vote was a vote to say, ‘protect the taxpayers first,’” he said Monday on CNN.
Rep. John Shadegg , R-Ariz., in an interview on MSNBC, said what happened yesterday is “Mr. Paulson got a civics lesson, which he desperately needed.”
Negotiators could tweak the existing proposal in ways designed to win more Republican votes. GOP Conference Chairman Adam H. Putnam , R-Fla., said after the Monday vote, “Doubling FDIC insurance, things like [accounting] changes, I think, are appealing to Republicans without being revolting to Democrats.”
Senate Plans Vote on Financial Rescue Wednesday
The Republican Study Committee, a group of conservative House Republicans, wants the core of the bill to create a government insurance plan for shaky assets, with premiums paid by financial institutions.
That is one of several options for the Treasury secretary in the current bill.
The RSC members also proposed new Securities and Exchange Commission regulations prohibiting “mark to market” accounting, which requires companies to value assets based on their current potential sale price.
There were signals that regulators might consider changing the rule to a mark-to-maturity standard, allowing banks and financial institutions to list mortgages and other debt instruments now frozen on their books at their value at maturity, rather than the current fire-sale price. That would instantly relieve some strains on the bottom line.
However Congress proceeds, strong signals from the market likely will dictate their behavior. Putnam said members watched the plummeting market numbers on a TV in the cloakroom before and during the vote. “We’re encouraging members to understand the consequences of doing nothing,” he said.
Although the markets closed higher Tuesday, few in Washington took that as a sign that all is well.
“There’s still evidence ... that markets are under stress and the banking system is under stress, specific banks are under stress,” Fratto said.
Bart Jansen contributed to this story.
First posted Sept. 30, 2008 10:09 a.m.
Comments
Marx's Proposal Number Five seems to be the leading motivation for those backing the Wall Street bailout Communist Manifesto, published in 1848, Karl Marx proposed 10 measures to be implemented after the proletariat takes power, with the aim of centralizing all instruments of production in the hands of the state. Proposal Number Five was to bring about the "centralization of credit in the banks of the state, by means of a national bank with state capital and an exclusive monopoly." We all know that the Media is controlled by the Liberal Democratic Party. Now they want to controll our money. Thank God that their are some Americans in Congress that defeated this Hoax of a Bail Out. Thank You REPUBLCANS.
I wonder whether the Republicans will block the decision again just because a Democrat says that conservative times regarding the economy are over. Since Reagan(Reagonomics= http://en.wikipedia.org/wiki/Reaganomics ) the GOP has really caused a lot of damage. We just see the result today.
Except it wasnt voted down by just Republicans. Was it 66 democrats that crossed the aisle to side with republicans against it? And the Republican leadership voted for it. Then the resultant plunge in the stock market represented a trillion dollar loss for those investors. One of my friends commented yesterday that by the time that unemployment had doubled people would be all in favor of legislation similar to this. Except by then it will have to involve another trillion. Remember that every time a company goes bankrupt it adds more unemployment. The Guys at the top with their golden parachutes who made the bad decisions are affected minimally. The guys at the bottom (who may number anywhere from 10 to 10,000) are now unemployed, their retirements may be affected (remember Enron), they've been screwed by the system. Most people who read this know how bad it can be to lose your job just before Christmas.
Doesn't anyone care that this is ILLEGAL? According to the Constitution (does anyone remember this document?), Article I, Section 7, only the House can originate an appropriations (financial) bill, never the Senate!
Bluefox is apparently crazy when he says "We all know that the Media is controlled by the Liberal Democratic Party." Lou Dobbs, Rush Limbaugh, Bill O'reilly, Ann Coulter, Pat Buchanan, Cal Thomas, George Will, Fox News, New York Post, washington Times, Clear Channel Radio syndicate, The weekly Standard, The Drudge Report, Fox News... Have you ever heard of these powerful media outlets and personalities? http://www.digitaljournal.com/user/295509/news
It was not so surprised that this was the major goal that ultimately they was, it just a matter of fact that we could no be control the event, even if we planned already but in behalf there are circumstances that who never know. Apparently, it wasn't enough to cover the mortgage crisis up with a TARP. No, Treasury Secretary Paulson's Troubled Asset Relief Program wasn't the kind of credit repair scores the endangered homeowners needed. Now that Federal Deposit Insurance Corp Chairman Sheila Bair has pushed a new mortgage modification program forward, 1.5 million homeowners will have someone new on their side when they're facing foreclosure. This $24.4 billion program will be drawn from the $700 billion pool that TARP set up, and it's a very straightforward system. Lenders will be given a stipend of $1,000 per loan they renegotiate with financially stuck homeowners, and in the event of default on a loan, the FDIC has promised to take on up to 50 percent of the loss. Paulson has condemned this, as mere spending that will only bankrupt the FDIC; others view this action on Bair's part as a needed investment to maintain liquidity in the mortgage industry. While this won't solve all of the problems at once, it's certainly a valiant effort to help repair credit, isn't it? Click to read more on Credit Repair
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