TOPICS > Economy

House Passes $700 Billion Financial Bailout Bill

BY Admin  October 3, 2008 at 2:40 PM EST

Speaker Nancy Pelosi, D-Calif., signs the bill; AP

Not long after the bill passed the House, President Bush said he would quickly sign the measure into law, applauding Congress for clearing the measure.

“We have acted boldly to prevent the crisis on Wall Street from becoming a crisis in communities across our country,” the president said.

Among the many features of the $700 billion measure, the bill will allow the Treasury Department to buy up bad debt from various lending institutions.

Investors and policy makers had been anxious for a resolution to the government’s plan to purchase soured assets from banks and other institutions to shore up the financial industry and help resuscitate credit markets.

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.”

Trading across markets has been volatile this week based on investors’ reading of whether the plan would win approval.

“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 Friday. “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.”

The House’s rejection of the initial bill on Monday took Wall Street and Capitol Hill by surprise and sent stocks into a record plunge.

Senate leaders quickly took custody of the measure, adding on $110 billion in tax and spending provisions designed to attract additional support, giving tax relief to millions of Americans, thousands of businesses and groups as diverse as solar power developers and victims of natural disasters.

The revised measure won Senate approval Wednesday night, 74-25, setting up a frantic round of lobbying in the House as the Bush administration, congressional leaders and presidential candidates joined forces to back the measure.

The tax relief package attached to the rescue bill promotes renewable energy development and extends dozens of tax breaks from the critical research and development tax credit to breaks for such narrowly focused groups as motor sports racetrack owners, film producers and bicycle commuters, according to the Associated Press.

However, the core of the plan remains little changed from its inception. The Treasury Department would have $700 billion at its disposal to purchase bad mortgage-related securities that are weighing down the balance sheets of institutions that hold them.

Lawmakers insisted on greater congressional supervision over the $700 billion, measures to protect taxpayers, and cracking down on “golden parachutes” that go to corporate executives whose companies fail.

“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.”