Washington D.C., USA "We have acted boldly to help prevent the crisis on Wall Street
from becoming a crisis in communities across our country," Bush
said shortly after the vote, although he conceded, "our economy
continues to face serious challenges."
Underscoring that somber warning, the Dow Jones industrials, up
more than 200 points at the time of the House vote, had fallen into
negative territory an hour later. They fluctuated as the afternoon
wore on.
The final vote, 263-171 in the House, capped two weeks of tumult
in Congress and on Wall Street, punctuated by daily warnings that
the country confronted the gravest economic crisis since the Great
Depression if lawmakers failed to act. There were 58 more votes for
the measure than an earlier version that failed on Monday.
"We all know that we are in the midst of a financial crisis,"
House Republican leader John Boehner of Ohio said shortly before
casting his vote for a massive government intervention in private
capital markets that was unthinkable only a month ago.
"And we know that if we do nothing, this crisis is likely to
worsen and to put us into an economic slump like most of us have
never seen," he said.
House Speaker Nancy Pelosi, D-Calif., said the bill was needed
to "begin to shape the financial stability of our country and the
economic security of our people."
Treasury Secretary Henry Paulson pledged to begin using his new
authority quickly, and Federal Reserve Chairman Ben Bernanke said
the central bank would work closely with the administration.
Wall Street welcomed the action, but investors also were
buffeted by a bad report on the job market. The Labor Department
said employers slashed 159,000 jobs in September, the largest cut
in five years and further evidence of a sinking economy.
At its core, the bill gives the Treasury Department $700 billion
to purchase bad mortage-related securities that are weighing down
the balance sheets of institutions that hold them. The flow of
credit in the U.S. economy has slowed, in some cases drying up,
threatening the ability of businesses to conduct routine operations
or expand, and adversely affecting consumers seeking financing for
mortgages, cars and student loans. Some state governments have also
experienced difficulty borrowing money.
The House vote marked a sharp change from Monday, when an
earlier measure was sent down to defeat, largely at the hands of
angry conservative Republicans.
On Friday, 91 Republicans joined 172 Democrats to support the
bill, while 108 Republicans and 68 Democrats opposed it.
Twenty-five Republicans and 33 Democrats switched their votes from
"no" to "yes." One Democrat who supported Monday's version,
Rep. Jim McDermott of Washington, opposed the bill Friday. One
Republican who didn't vote Monday, Rep. Jerry Weller of Illinois,
voted "yes" on Friday.
Several of the Democrats who switched were members of the
Congressional Black Caucus who said presidential candidate Barack
Obama had pledged to support legislation easing the burden on
consumers if he wins the White House.
Republican presidential candidate John McCain also lobbied for
the measure, according to aides who declined to release a list of
lawmakers he called.
Following Monday's vote, Senate leaders quickly took custody of
the measure, adding on $110 billion in tax and spending provisions
designed to attract additional support, then grafting on
legislation mandating broader mental health coverage in the
insurance industry. The revised measure won Senate approval
Wednesday night, 74-25, setting up a furious round of lobbying in
the House as the administration, congressional leaders, the major
party presidential candidates and outside groups joined forces
behind the measure.
In addition, the measure was changed to broaden the federal
government's deposit insurance program, and the Securities and
Exchange Commission loosened a regulation to ease the impact of the
distressed assets on the balance sheet of financial institutions.
Despite occasionally strong criticism of the added spending and
tax measures, the maneuvers worked -- augmented by a sudden switch
in public opinion that occurred after the stock market took its
largest-ever one-day dive on Monday.
"No matter what we do or what we pass, there are still tough
times out there. People are mad -- I'm mad," said Republican Rep.
J. Gresham Barrett of South Carolina, who opposed the measure the
first time it came to a vote. Now, he said, "We have to act. We
have to act now."
Rep. John Lewis, D-Ga., another convert, said, "I have decided
that the cost of doing nothing is greater than the cost of doing
something."
Critics were unrelenting.
"How can we have capitalism on the way up and socialism on the
way down," said Rep. Jeb Hensarling of Texas, a leader among
conservative Republicans who oppose the central thrust of the
legislation -- an unprecedented federal intervention into the
private capital markets.
It was little more than two weeks ago that Paulson and Bernanke
concluded that the economy was in such danger that a massive
government intervention in the private markets was essential.
White the main thrust of their initial proposal was unchanged,
lawmakers insisting on greater congressional supervision over the
$700 billion, measures to protect taxpayers and steps to crack down
on so-called "golden parachutes" that go to corporate executives
whose companies fail.
Earlier in the week, the legislation was altered to expand the
federal insurance program for individual bank deposits, and the
Securities and Exchange Commission took steps to ease the impact of
the questionable mortgage-backed securities on financial
institutions.
In the moments before the vote, Rep. Barney Frank, D-Mass.,
chairman of the House Financial Services Committee, pledged
"serious surgery" next year to address the underlying causes of
the crisis.
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. The news of the payroll cuts came on
top of Thursday's Commerce Department report that factory orders in
August plunged by 4 percent.
Typifying arguments the problem no longer is just a Wall Street
issue but also one for Main Street, lawmakers from California and
Florida said their state governments were beginning to experience
trouble borrowing funds for their own operations.
Pelosi said, "We must win it for Mr. and Mrs. Jones on Main
Street."
One month before Election Day, the drama unfolded in an
intensely political atmosphere.
Members of the Congressional Black Caucus credited Obama with
changing their minds.
Reps. Elijah Cummings and Donna Edwards, both Maryland
Democrats, were among them. They said Obama had pledged if he wins
the White House that he would help homeowners facing foreclosure on
their mortgages. He also pledged to support changes in the
bankruptcy law to make it less burdensome on consumers.
Obama's rival, Republican Sen. McCain, announced a brief
suspension in his campaign more than a week ago to try and help
solve the financial crisis.
Republican Rep. Sue Myrick of North Carolina, who switched her
vote to favor the measure, said, "I may lose this race over this
vote, but that's OK with me. This is the right vote for the
country."
Myrick said she hadn't heard from McCain as she made up her mind
about how to vote. "They told me he was going to call me. He
didn't," she said.
The vote on Monday had staggered the congressional leadership
and contributed to the largest one-day stock market drop in
history, 778 points as measured by the Dow Jones Industrials.
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