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Modified Wall Street Rescue Plan Awaits Senate Vote

As the Senate votes on a modified version of the $700 billion bailout package that the House rejected, political and economic experts assess the measure's likely path and how it will affect financial markets abroad.

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    NewsHour congressional correspondent Kwame Holman begins our coverage of the second run toward a financial rescue bill.

    SEN. HILLARY CLINTON (D), New York: This is a sink-or-swim moment for our country, and we cannot merely catch our breath. We must swim for the shores.


    Senators pleaded for passage of the latest version of the financial rescue plan this afternoon ahead of tonight's vote that brought in Senators Biden, McCain, and Obama from the campaign trail.

    Tonight's expected Senate approval follows the bailout bill's stunning defeat in the House on Monday. That led to slight revisions to the package and the decision to have the Senate vote first.

    Republican Leader Mitch McConnell.

    SEN. MITCH MCCONNELL (R-KY), Senate Minority Leader: I'm optimistic that we're going to have a significant bipartisan victory on the rescue plan here in the Senate tonight.

    I think it's important to remember this is about Main Street and not Wall Street. It's about unlocking the frozen credit markets and getting America's economy moving again.


    Majority Leader Harry Reid.

    SEN. HARRY REID (D-NV), Senate Majority Leader: I would not have moved forward on this if I didn't think the chance in the House was good.

    Now, I don't — I don't run the House. I have nothing to do with the House other than answer questions from the leadership. That's a decision that the Democratic and Republican leaders over there will have to make a decision.

    But this is good legislation. And I hope that no one thinks I'm trying to jam anyone. This is an effort to solve what I think is the greatest financial crisis we've had since the Great Depression.


    The modified bill still centers on authorizing the Treasury Department to use up to $700 billion to buy up bad mortgage-backed securities.

    In addition, it would increase federal insurance on bank deposits from $100,000 to $250,000. The guaranteeing agency, the Federal Deposit Insurance Corporation, also would be allowed temporarily to borrow unlimited funds from the U.S. Treasury.


    That's what this raising FDIC is all about, so small community banks don't have to be afraid of people taking their deposits out and taking them to the big city.


    Unlike the original bill, the Senate version has other provisions unrelated to the financial crisis. It would prevent 20 million Americans from being hit by the alternative minimum tax next year and extend a series of energy and other tax breaks for businesses.

    Since Monday's failed vote in the House, lawmakers have gotten feedback about the urgency to pass something that will unlock frozen credit markets. Tennessee Republican Lamar Alexander.

    SEN. LAMAR ALEXANDER (R), Tennessee: The Nashville Tennessean reports today that the largest General Motors car dealer just south of Nashville turned down a third of the people who came in to buy a car for their auto loans.

    The New York Times reports today that, across the country, the number is about 63 percent — the number is 63 percent of people who can get the loan, when normally it's 83 percent.

    What is happening is not directed at the stock market; it's directed at the credit market. What we have is, as most of us have said, a big wreck in the middle of the economic highway, and it's clogging up our payroll check, our auto loan check, our money for our mortgage loan or for our farm credit loan, and it can't get through the wreck, and the economic traffic can't be moving.


    When the House takes up the revised bill tomorrow or Friday, it will need 12 more votes than the first bill got.

    One of them will not come from Democrat Peter DeFazio of Oregon, who says revising the plan doesn't fix its core problem: allowing Treasury Secretary Paulson to purchase a range of questionable assets.

    REP. PETER DEFAZIO (D), Oregon: It's the original Paulson program with bells and whistles. He can buy any sort of asset he determines. That could be credit card debt. It could be auto loans. He says he wants to do that.

    It could be personal debt. It might be pawn shop certificates, maybe office buildings, anything he wants, at any price he wants, under any conditions he wants, but he'll have to tell us after he's done it. This is unbelievable power to give to this guy. He will be God on Wall Street.


    Connecticut Republican Christopher Shays admits not all of the bill's critics have been satisfied, but says members must vote "yes" this time, as he did on Monday.

    REP. CHRISTOPHER SHAYS (R), Connecticut: We haven't done a good job of articulating. The challenge we have is, if we vote for this bill, things may not go really well. They may continue to decline a bit. But had we not voted for it, we might have had a disaster that they will never have known about.

    I think this bill will pass the Senate. I think it will pass the House. And I think it will pass because we're having some people act like grownups, and not panic, and realize that we don't have to throw everything out and start fresh.


    Both presidential candidates were expected to cast Senate votes tonight on the rescue bill, beginning the process leaders promise will end this time in certain congressional approval.