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Bailout Discord Persists as Congress Seeks to Fix Economy

With Congress set to revisit reaching a compromise over the proposed $700 billion bailout that failed in the House on Monday, a panel of lawmakers debate the plan and future efforts to alleviate the economic meltdown.

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    And NewsHour correspondent Kwame Holman begins our day-after report.


    Within hours of President Bush's call for Congress to redouble efforts on an economic rescue package that could cost up to $700 billion, the major presidential nominees followed suit.

    Barack Obama and John McCain also separately phoned the president and requested the same idea to help a new proposal pass: raising the amount of federal insurance on bank deposits from $100,000 to $250,000.

    This afternoon, the chair of the Federal Deposit Insurance Corporation also endorsed an increase, saying, "To address this crisis of confidence, I do believe that it would be helpful for the FDIC to have the temporary ability to raise deposit insurance limits."

    Meanwhile, McCain said the U.S. Treasury Department should make full use of the resources already at its disposal. He spoke in Des Moines, Iowa.

    SEN. JOHN MCCAIN (R), Arizona: First, the Treasury has already used its exchange stabilization fund to back money market accounts. I encourage it to use this fund as creatively as possible to provide backstop for accounting — accounts across our financial system, to maintain confidence on the part of savers and investors.

    And, second, the recent housing bill gave the government nearly $1 trillion in authority to purchase mortgages. Housing and mortgages are at the root of this crisis. I encourage Treasury to take action to shore up mortgage values.

    The administration can take these actions with the stroke of a pen to help alleviate the crisis gripping our economy. I urge them to do so.

    I call on everyone in Washington to come together in a bipartisan way to address this crisis. And I know that many of the solutions to this problem may be unpopular, but the dire consequences of inaction will be far more damaging to the economic security of American families, and the fault will all be ours.


    In Reno, Nev., Obama acknowledged the widespread public dislike for the financial rescue, but argued it's a must to prevent economic harm to ordinary Americans.

    SEN. BARACK OBAMA (D), Illinois: If this is managed correctly, we will hopefully get most or all of our money back, possibly even turn a profit on the government's investment, every penny of which will go directly back to you, the investor, or will be going into drawing down on our national debt.

    And if we do have losses, I've proposed to institute a financial stability fee on the entire financial services industry so that Wall Street foots the bill, not the American taxpayer.

    But understand, even with all these taxpayer protections, I know that this plan is not perfect and it's not foolproof. No matter how well we manage the government's investments under this plan, we're still putting taxpayer dollars at risk.

    And I know that there are Democrats and Republicans in Congress who have legitimate concerns about this. I know there are many Americans who share these concerns. What I also know is we can't afford not to act.


    Meanwhile in Washington, a group of House Democrats who helped bring down the rescue plan yesterday came forward with an alternative.

    REP. PETER DEFAZIO (D), Oregon: The point is, folks would like to come together on something that doesn't put the taxpayers at risk. That's a common theme among members both who voted for the bill and who voted against the bill: Don't put the taxpayers at risk. The protections in that bill yesterday were nonexistent.


    On the other side of the Capitol, Senate Republicans met to discuss a strategy to save the rescue plan.

    Republican leader Mitch McConnell.

    SEN. MITCH MCCONNELL (R-KY), Senate Minority Leader: We've got a genuine crisis in the credit markets that have to be dealt with. And the market sent us a strong message yesterday that no action is not a solution. We're not going to sit around and point fingers. We're going to get the job done, and we're going to get it done this week.


    The Senate could act on a bailout bail as early as tomorrow evening. The House is expected to take up the rescue plan soon after it returns on Thursday from a break for the Jewish New Year.