Thread: Vote to start debate on Bailout bill. 220-198 (Indicator)

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Wall St deal passes first voteFont Size: Decrease Increase Print Page: Print Correspondents in Washington | September 30, 2008

LEGISLATION enabling a sweeping $US700billion ($850billion) Wall Street rescue last night survived a key test vote on the floor of the US House of Representatives.

After a tumultuous week of round-the-clock negotiations, the house voted 220-198 to move forward the bill to stave off a global financial meltdown. (This vote is to start debate, a good indicator of what the final vote will be).


The success of the procedural motion setting the ground rules for a three-hour debate and a final vote likely at midday (5am AEST) - came not long after President George W. Bush once again urged passage of the Emergency Economic Stabilisation Act (200.


"Every member of Congress and every American should keep in mind that a vote for this bill is a vote to prevent economic damage to you and your community,'' said Mr Bush, fully aware that congressional passage of the legislation is far from assured.


"With this strong and decisive legislation we will help restart the flow of credit so American families can meet their daily needs and American businesses can make purchases, ship goods and meet their payrolls.''


The plan is likely to have an easier passage in the Senate, where it has more support from Republicans.


As debate opened on the package, Congressman Barney Frank, a Democrat and one of its architects, called the measure a "tough vote'', but a necessary one to stave off a financial meltdown.


"Many of us feel that the national interest requires us to do something which is, in many ways, unpopular,'' said Mr Frank, the Financial Services Committee chairman.


"It is hard to get political credit for avoiding something that has not yet happened.''


Two leading players in the negotiations also spoke last night, taking to television news shows to lobby for approval of a package deeply unpopular with a public angry that taxpayer money will save Wall Street firms from heavy risk-taking. Thousands of angry phone calls, e-mails and letters have poured into Congress from constituents. Their message essentially: it's a hold-your-nose-and-vote matter.


Senator Chris Dodd, a Democrat, said that failure to act would spread the contagion of frozen credit markets even further. "This is not just about Wall Street,'' said the Banking Committee chairman.


Senator Judd Gregg, a Republican, said: "It's one of those situations where if it passes and works, people will never know how close we were to the brink.''


Still, both men said the necessity of such massive government action is a sad day for the US.

Asked if the legislation, slated for a Senate vote as early as tomorrow, would pass, Senator Dodd said only: "We hope so'' .


Investors worldwide and in early trading in the US continued to show doubt about whether the bill would go through, much less go a long way toward curing the systemic problems that have unnerved financial markets across the globe for weeks.


Federal Reserve chairman Ben Bernanke in a statement last night welcomed agreement on a compromise bill.


"This legislation should help to restore the flow of credit to households and businesses that is essential for economic growth and job creation, while at the same time affording strong and necessary protections for taxpayers,'' Dr Bernanke said, calling for swift passage.


Mr Bush said he fully understands the bailout bill was a difficult vote for Congress, and after his statement on the South Lawn he, and Vice-President Dick Cheney, took to the phones to corral individual members.


The president argued that jittery US taxpayers will benefit from a number of safeguards that Congress wrote into the pending legislation, including checks and balances on the operation of the program, curbs on "golden parachutes'' for top executives of firms getting help, and assurances that taxpayers would ultimately be reimbursed by the companies for any losses.


But the government would have broad discretion to decide how to implement both. The legislation also requires that the government take ownership stakes in companies that receive federal infusions, so it could share a piece of potential future profits.


Mr Bush also said the ultimate cost of the bailout will be much less than the $US700 billion authorised in the bill. The sour assets -mostly mortgage-backed securities - that the program allows the government to take off the books of struggling financial institutions will eventually be sold, perhaps even at a profit.


Still, Mr Bush hinted that this may not be the last intervention required.


"Even with the important steps we're taking to address the current crisis, we will continue to face serious challenges,'' he said.


The final 110-page bill was released early yesterday after a final weekend of intense negotiating, and Republicans and Democrats huddled for hours in private meetings to learn its details and voice their concerns. Many said they left uncertain of how they would vote.

I keep hearing as part of the supports of the bailout that businesses can't make payroll if they can't borrow money. Why do they have to borrow to make payroll anyway? If their money is that tight they have already failed anyway....let them fall so that future businesses will be responsible for their financial decisions!

I thought they had to have a 2/3 majority to pass this. That would have to be 290 yea votes.

They only need 2/3 to make a bill veto proof.

Originally Posted by avenger

I keep hearing as part of the supports of the bailout that businesses can't make payroll if they can't borrow money. Why do they have to borrow to make payroll anyway? If their money is that tight they have already failed anyway....let them fall so that future businesses will be responsible for their financial decisions!

Companies that have to borrow to make payroll are not managing their money wisely. I know that small business's some times are going week to week and it is tough but they have to manage better.