The Housing Chronicles Blog: Senate gets enough votes to pass bailout bill to House

Wednesday, October 1, 2008

Senate gets enough votes to pass bailout bill to House

Following the $1+ trillion loss in the stock market on Monday, it looks like the voter angst against the bail-out turned around when people saw the impact to their investment portfolios. I guess they didn't believe Paulson the first time? So far it looks like the Senate will in fact have enough votes to send this bill to the House for a vote by Friday.

From a CNN story:

The Senate on Wednesday night passed a sweeping and controversial financial bailout similar in key ways to one rejected by the House just two days earlier...

Like the bill the House rejected, the core of the Senate bill is the Bush administration's plan to buy up to $700 billion of troubled assets from financial institutions.

Those assets, mostly mortgage-related, have caused a crisis of confidence in the credit markets. A major aim of the plan is to free up banks to start lending again once their balance sheets are cleared of toxic holdings.

But the Senate legislation also includes a number of new provisions aimed at Main Street.

The changes are intended to attract more votes in the House, in particular from House Republicans, two-thirds of whom voted against the bailout plan.

The House is expected to take up the Senate measure for a vote on Friday, according to aides to Democratic leaders...

The bill adds provisions to the House version - including temporarily raising the FDIC insurance cap to $250,000 from $100,000. It says the FDIC may not charge member banks more to cover the increase in coverage. But that doesn't prevent the agency from raising premiums to cover existing concerns with the insurance fund, according to Jaret Seiberg, a financial services analyst at the Stanford Group, a policy research firm.

Instead, the bill allows the FDIC to borrow from the Treasury to cover any losses that might occur as a result of the higher insurance limit.

The bill also adds in three key elements designed to attract House Republican votes - particularly popular tax measures that have garnered bipartisan support.

It would extend a number of renewable energy tax breaks for individuals and businesses, including a deduction for the purchase of solar panels.

The Senate bill would also continue a host of other expiring tax breaks. Among them: the research and development credit for businesses and the credit that allows individuals to deduct state and local sales taxes on their federal returns.

In addition, the bill includes relief for another year from the Alternative Minimum Tax, without which millions of Americans would have to pay the so-called "income tax for the wealthy."...

Despite the Senate bill's sweeteners, the bill did not garner unanimous support because those who oppose the Treasury plan felt passionately it was the wrong approach...

Opponents of the bill have said they resented being given a "my way or the highway" choice to address what they acknowledge is a very serious economic threat...

Now the fate of the bailout rests with the House...

The plan could attract House Republicans while simultaneously alienating bailout supporters among the Democrats because the tax cuts in the revenue bill aren't offset by spending cuts or increased revenues.

One aide in the GOP Senate leadership said getting House Democrats on board with the sweetened bill will be "a fairly substantial problem."


Anonymous said...

This needed to be passed, because it wasn't a "wallstreet" issue, it was a mainstreet issue. over $1.7 trillion was lost because of this NOT being passed the first time. It was lost by us "Mainstreet" folks.

Anonymous said...

To simplify the bailout bill.
1. Wall street, Goverment, American households are all broke.
2. The government is going to tax American households (through printing of money and inflation) to get money for this bailout.
3. The government is then going to lend this money to Wall Street at a negative interest rate and lose money on it.
4. Wall Street is then going to lend it back to us through bank loans at a high interest rate.
5. American households will be discouraged to work due to high inflation and declare bankruptcy.
6. A high number of bankruptcies will cause Wall street to go into bankruptcy.
7. Wash rinse repeat till we have a serious depression or the value of the dollar is equal to 0.