The US Senate set a vote for Wednesday night (US time) on a $700 billion financial-rescue plan, tying it to an increase in bank-deposit-insurance limits and tax breaks to win support from Republicans.
The House of Representatives is likely to vote on Friday, October 3, Brendan Daly, a spokesman for House Speaker Nancy Pelosi said today.
The measure the Senate would take up tonight includes temporarily raising the limit on federal deposit insurance to $250,000 from $100,000 at present. That increase was proposed by Republicans critical of the plan authorising Treasury Secretary Henry Paulson to buy troubled debt from lenders, which was rejected by the House two days ago.
Also linked to the legislation is a two-year extension of tax breaks that will save individuals and corporations about $149 billion over the next decade, another move popular among House Republicans. Two-thirds of House Republicans and 40 per cent of Democrats defeated the bailout plan on a 228-205 vote. President George W Bush and Senate leaders vowed to revive the legislation.
The Senate is expected to pass the Bill, with most Democrats and Republicans behind it. There is also increased optimism that the House would go along, as pressure mounts on lawmakers to help restore confidence in the banking system.
European Central Bank President Jean-Claude Trichet said US lawmakers must pass the measure to shore up confidence in the global financial system. European governments have helped rescue at least five banks since September 28, with Trichet taking part in talks to save Belgium’s Fortis over the weekend.
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“It has to go, for the sake of the US and for the sake of global finance,” Trichet said in an interview in Frankfurt late yesterday. “I am confident, but of course it is the decision of the US Congress.”
After a week-long torrent of calls and e-mails from angry voters opposing the rescue package, the tide turned after markets plunged on September 29 in response to the House vote.
“Over $1 trillion worth of market value was wiped off the books by the stock market drop,” said Senator Robert Bennett, a Utah Republican. “It is ordinary people looking at ordinary pensions, with their ordinary Main Street kind of 401(k) plans, who lost that $1 trillion. And they lost it in a matter of minutes.”
Texas Republican Representative Joe Barton’s office said constituent calls and e-mails swung to as much as 70 per cent in favour of Congressional action, after having been overwhelmingly against a taxpayer rescue of Wall Street. The Dow Jones Industrial Average’s record 778-point nosedive two days ago ratcheted up pressure on Congress.
The flood of e-mails to Capitol Hill swamped congressional computers, slowing communications and internet access, said Kyle Anderson, a spokesman for the House Administration committee. On Google’s search engine, “bailout vote” and “House vote” were the fifth- and sixth-most-searched terms on September 29. “Roll call vote” and “who is my congressman?” also made the top 50.
To be sure, some lawmakers say their constituents are still opposed, and they have no regrets about killing the plan that was presented to the House. “One of the best votes of my career,” said Representative Peter DeFazio, an Oregon Democrat.
The bank-rescue package would give the treasury secretary broad power to buy troubled assets, chiefly mortgage-backed securities, that are burdening investors and financial institutions. The Senate’s final version of the legislation is still being drafted. Under the accord, announced on the Senate floor, Republican Leader Mitch McConnell and Majority Leader Harry Reid must still agree on the language before a vote can take place. It will be offered as an amendment to a piece of House-passed legislation awaiting Senate action and called up for a vote after 7:30 pm Washington time.
The tax package that is part of the legislation also includes $17-billion in tax credits for the development of solar, wind and other forms of renewable energy. It passed the Senate on a 93-2 vote last week and differs from a version the House also approved. The package would spare 24 million households from a $62-billion alternative-minimum tax that is due to take effect this year.
Fiscally conservative House Democrats known as Blue Dogs opposed the Senate Bill because it was not fully offset by new tax revenue. The House version of tax breaks was paid for. Senate leaders refused to consider the House Bill, saying it would never pass in that chamber. The financial rescue measure won support from 24 of the Blue Dogs on Monday.
“We’re going to have to be talking to them,” House Majority Leader Steny Hoyer said of the Blue Dogs. “I’m not particularly pleased with that addition myself, very frankly,” he asses
At the White House, the president said yesterday he realised “this is a difficult vote for members of Congress. But the reality is that we’re in an urgent situation and the consequences will grow worse every day.”
| ASIAN MARKETS | |||
| Oct 1 | Net Chg* | % Chg* | |
| Sensex | 13055.67 | 195.24 | 1.52 |
| Nikkei 225 | 11368.26 | 108.40 | 0.96 |
| Taiwan Taiex | 5764.01 | 44.73 | 0.78 |
| SET | 594.45 | -2.09 | -0.35 |
| Kospi | 1439.67 | -8.39 | -0.58 |
| European Markets^ | |||
| FTSE 100 | 4971.99 | 69.54 | 1.42 |
| CAC 40 | 4026.57 | -5.53 | -0.14 |
| DAX | 5791.64 | -39.38 | -0.68 |
| US Markets z | |||
| Oct 1 | |||
# The China, Indonesia and Singapore markets were closed on Wednesday
Bush “will be speaking with senators today,” spokesman Tony Fratto said in an e-mail today. “This morning we’re seeing increased evidence of the credit squeeze on small businesses and municipalities all across the country, so it’s critically important that we approve legislation this week and limit further damage to our economy.”
To help restore confidence in the nation’s lenders, FDIC Chairman Sheila Bair sought the temporary increase in the bank-deposit insurance limits. That move was endorsed by both Republican presidential nominee John McCain and Democratic rival Barack Obama. Both presidential candidates plan to return to Washington for tonight’s vote, their aides said.
Reid said he's in contact with White House Chief of Staff Josh Bolten. He also said Obama informed him he talked to Bush about the plan. “We’re working together to try to resolve this,” Reid said.