us senate passes bailout plan, page-7

Copper

U.S. Senate Begins Voting on $700 Billion Financial Rescue Plan
By James Rowley and Brian Faler



Oct. 1 (Bloomberg) -- The U.S. Senate began voting tonight on a $700 billion financial-rescue package after a preliminary test of support cleared the way for passage.

Senate approval would permit a vote probably Friday in the House of Representatives, where lawmakers will consider reversing their rejection earlier this week of similar legislation. The Senate bill was revised to win support from reluctant House members.

``We've got to get this done,'' said Senate Majority Leader Harry Reid, a Nevada Democrat. Minority Leader Mitch McConnell, a Kentucky Republican, forecast Senate victory for the measure, which is designed to end a credit crunch and restore confidence in the nation's banking system.

The Senate began voting at 9:22 p.m. Washington time on legislation that links the rescue plan to an increase in bank- deposit-insurance limits and tax breaks.

The House rejected a bailout two days ago, as two-thirds of House Republicans and 40 percent of Democrats voted against it. That prompted revisions to attract more Republican support. The changes may have angered some House Democrats, Reid said earlier today.

The Senate measure would temporarily raise the limit on federal deposit insurance to $250,000 from $100,000. That increase was proposed by Republicans critical of the plan authorizing Treasury Secretary Henry Paulson to buy troubled debt from lenders.

Tax Breaks

Also linked to the legislation is a two-year extension of tax breaks that will save individuals and corporations about $149 billion over the next decade, another move popular among House Republicans.

House Majority Leader Steny Hoyer, a Maryland Democrat, said some Democrats, concerned about the widening federal deficit, may oppose the addition of the tax breaks without offsetting spending cuts or tax increases.

After a week-long torrent of calls and e-mails from angry voters opposing the rescue package, the tide turned after markets plunged on Sept. 29 in response to the House vote.

``Over $1 trillion worth of market value was wiped off the books by the stock market drop,'' said Senator Robert Bennett, a Utah Republican. ``It is ordinary people looking at ordinary pensions, with their ordinary Main Street kind of 401(k) plans, who lost that $1 trillion. And they lost it in a matter of minutes.''

The flood of e-mails to Capitol Hill swamped congressional computers, slowing communications and Internet access, said Kyle Anderson, a spokesman for the House Administration committee.

Forcing Congress's Hand

House Minority Whip Roy Blunt, the Republicans' chief vote counter, predicted that voters' economic worries would force Congress to act. ``The impact this could have on the markets will have a big impact on getting people back to wanting to work together to get this problem solved,'' he said.

House Republican leader John Boehner, who backed the House measure that failed, said he supports the Senate legislation.

Other lawmakers say their constituents are still opposed, and they have no regrets about killing the plan that was presented to the House. ``One of the best votes of my career,'' said Representative Peter DeFazio, an Oregon Democrat.

The Senate's proposed tax breaks include $17 billion in credits for the development of solar, wind and other forms of renewable energy. The package would spare 24 million households from a $62 billion alternative-minimum tax that is due to take effect this year.

To help restore confidence in the nation's lenders, FDIC Chairman Sheila Bair sought the temporary increase in the bank- deposit insurance limits.

Under the measure, banks won't be required to pay additional premiums for the coverage, which expires in 2009.

To contact the reporters on this story: James Rowley in Washington at [email protected]; Brian Faler in Washington at [email protected]

Last Updated: October 1, 2008 21:24 EDT

They're due to vote tonight