Bailout Do-Over Passes House
Apparently some things are better the second time around. After saying “no” on Sept. 29, the House of Representatives debated and then passed in a vote of 263 to171 a $700-plus billion rescue plan for Wall Street today, the centerpiece of which gives the U.S. Treasury the green light to buy up billions of dollars in toxic mortgage securities and other bad debt from financial institutions. Earlier in the week, in a vote of 74 for and 25 against, the U.S. Senate overwhelming passed the controversial bailout bill.
The House may have changed its mind because of several revisions made to the original bill.
Among the changes:
• An insurance program that would provide a guarantee on the value of some of the mortgage-backed assets purchased by the Treasury.
• Authority for the Securities and Exchange Commission (SEC) to change “mark-to-market” accounting rules. Wall Street banks and other financial services firms use the rules to value assets at their current market value instead of their projected value.
• A temporary increase in the amount of bank deposits covered by the Federal Deposit Insurance Corporation (FDIC) to $250,000 from $100,000.
• Retention of limits for executive bonuses at companies that benefit from the bailout.
• Some $150 billion of taxpayer benefits unrelated to the bailout, including a one-year delay of higher tax rates under the Alternative Minimum Tax; a clean-energy tax package; and extensions on tax deductions for tuition and education expenses.
When the House conducted its first vote on the bailout plan several days ago, the bill fell 13 votes short of passing. As members readied for today’s second vote, at least 24 lawmakers said they would switch their previous votes of “no” to a “yes.”
Representative Steve Cohen (D-Tenn.) was one of the individuals who tried to garner support from the opposition, making an analogy to musical lyrics by Mick Jagger of the Rolling Stones: “Sometimes you get what you want. Sometimes you get what you need.”
Only time will tell if that indeed becomes the case. Stay tuned.
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