The House of Representatives passed a revised version of the $700 billion bailout package Friday afternoon by a vote of 263 to 171 and President Bush immediately signed the bill into law. The earlier version was rejected on Monday.
“By coming together on this legislation, we have acted boldly to help prevent the crisis of Wall Street from becoming a crisis in communities across our country,” said Mr. Bush.
Rep Chris Van Holland, R-MD, said Congress had no choice but to pass the bill.
“The American economy is extremely weak and because of the credit crunch in the financial markets, we faced an extreme danger that we would go from weak to dropping off a precipice,” he said. “That is why the possibility of doing nothing was not an option.”
The vote came after a roller coaster week of arm-twisting, late-night wheeling-and-dealing, finger pointing and the largest one-day-drop ever in the Dow Jones Industrial Average. The package paves the way for the government to purchase up to $700 billion in bad loans and mortgage-related assets in the hopes of staving off a meltdown in the financial markets.
But not everyone agreed to reverse their stand in the House. Rep. Devin Nunes, R-Calif., whose Central Valley district has been decimated by foreclosures, said he refused to be bullied into supporting a bill that he feels isn’t in the best interest of taxpayers. “Why do we need to give $700 billion to one man to play
hedge fund God from the gilded offices of the U.S. Treasury?” he said. “If the [Treasury] Secretary wants to run a
hedge fund, he should go back to Wall Street.”
Another representative, Rep. Pete Stark, D-Calif., said it’s “nothing but a bailout of Wall Street and corporate America and does nothing for middle America.” He accused the Bush Administration of fear-mongering, saying it’s the same tactic it used when coercing Congress to support a war on the fear that if it didn’t “terrorists would be walking the streets.”
The uncertainty was reflected in Friday’s trading as the Dow Jones Industrial Average ricocheted back and forth between rising and falling for much of the afternoon following the bill’s passage.
Many lawmakers were feeling the heat from angry taxpayers who had been flooding their offices with e-mails and phone calls, with the overwhelming majority urging them to vote down the bill.
There’s a perception among skeptical taxpayers that the bill would bail out Wall Street fat cats who got the country into the mess in the first place and do nothing for Main Street.
And during an election year, many politicians were jittery about ignoring public opinion out of fear they could wind up joining the country’s growing unemployment ranks in November.
However, the Senate breathed new life into the bill on Wednesday when it passed a modified version of the bill by a vote of 74 to 25. The revised bill included new tax breaks and perks, aimed at convincing the House to reverse its veto.
The add-ons included a myriad of tax breaks for businesses ranging from movie production companies to makers of children’s wood arrows, as well as tax perks for users of alternative energy and hurricane victims.
Also, it boosted the limit on FDIC-insured bank deposits to $250,000 from $100,000 for one year and even improved health insurance for mental health. The new perks added more than $100 million to the bailout’s cost.
Geoffrey VanderPal, a planner at Elite Financial Planning Group of America Inc. in Las Vegas, which manages more than $100 million in assets, said the bill should help to stave off a deeper
recession or possible depression. However, “I think the bill should have had more teeth in assisting homeowners and forcing financial firms and mortgage companies to negotiate with homeowners.”
