Financial Rescue Vote Set for Wednesday in Senate

Dodd said he and his colleagues would work through the evening on the legislation. He said he had contacted House Minority Whip Roy Blunt , R-Mo., on Tuesday and they had discussed adding the FDIC language.

A House Democratic aide said Pelosi and Reid spoke Tuesday evening about the Senate plan, but it was unclear if the House was involved in formulating the strategy.

Pelosi said that since Monday’s vote, “House leaders have been in frequent communication with each other and the White House to find a plan that can win strong bipartisan approval in the House,” not mentioning any involvement with the Senate.

“Many members have offered ideas to modify the emergency bill narrowly defeated yesterday, and we are discussing those recommendations,” she said.

Reid said in a statement: “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. We have worked in a bipartisan 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.”

Senate aides confirmed that mental health parity language would be in the bill. The proposal would require that private health insurers make mental health and addiction-treatment benefits equal to traditional medical benefits, so that co-payments, treatment limits and out-of-network coverage could not be less generous for mental health and addiction treatments. The language is the same as that from the original Senate tax extenders bill, according to two Senate aides.

The parity legislation — long considered a civil rights and patient rights goal for elder statesmen such as Sens. Edward M. Kennedy , D-Mass., and Pete V. Domenici , R-N.M., as well as many key House members — has been considered bait to draw more votes to the tax package.

A Senate aide said that the ailing Kennedy was “still scheduled to be back in January” and did not say that the senator might return for the vote.

Satisfying Sanders

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 primary 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.

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. The proposal to boost Federal Deposit Insurance Corp. coverage of deposits was one early area of agreement, since it would be popular with members of both parties.

Financial Rescue Vote Set for Wednesday in Senate

FDIC Chairwoman Sheila C. Bair said she will seek a temporary increase in the deposit insurance limit, currently set at $100,000. The two major party presidential candidates — 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.”

An expansion of unemployment insurance was also discussed, but it was unclear where that stood Tuesday night.

McCain and Obama are planning to return to Washington on Wednesday.

Stepped Up Sales Plan

As policy ideas emerged to attract more votes in Congress to the rescue plan, supporters also 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 their jobs and lifestyles, and that action is needed soon.

For the second day in a row, President Bush exhorted Congress to swallow its reservations and pass bailout legislation.

“If our nation continues on this course the economic damage will be painful and lasting,” Bush said, noting that Monday’s stock market plunge following the House’s 205-228 defeat of the plan “represented more than a trillion dollars in losses,” much of it from the life savings, pensions and retirement accounts of ordinary Americans.

Even though the Dow Jones rose 485 points Tuesday, after losing 778 points the day before, lawmakers and administration officials warned of continued volatility and pointed to broader problems in the credit market.

Speaking to reporters at the White House, Fratto said, “There’s still evidence . . . that markets are under stress and the banking system is under stress, specific banks are under stress.”

The administration was considering a number of options for tweaking the financial rescue to round up the necessary votes, he said.

“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 allocated for the rescue.

Financial Rescue Vote Set for Wednesday in Senate

“We think that’s the right number,” Fratto said of the $700 billion authorization. “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.”

Resistance Remains

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. Their input and reactions could sway some votes in Congress.

Asked about the revised 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.”

Before the Senate plan was announced, House members of both parties who voted against the bailout bill (HR 3997) showed little inclination to reconsider their votes.

A group of Democrats introduced an alternative to the plan negotiated by Paulson and congressional leaders and conservative Republicans continued to denounce the plan publicly.

Drew Armstrong, David Clarke, Jonathan Allen, Joseph J. Schatz, Catharine Richert and Keith Perine contributed to this story.