Congress passes the bailout bill

The deed is done. Despite huge voter disquiet about the terms of the bailout package, Congress has passed the bill and it awaits the U.S. President’s signature. The house vote was 263 to 171, with a huge number of Congress members moving to a ‘yes’ vote this go ’round.

This bill is better than nothing. However, it is disappointing that the basic framework of Paulson’s original Economic Patriot Act are still intact. And the massive tax breaks and pork barrel spending attached to the bill are giveaways in an election year.

Because of the 777 point drop earlier this week, Congress caved — because they had no plan of their own. In the end they will be coming back to the well for more, guaranteed.

Wall Street was up on the news.

The Bush administration’s $700bn (£380bn) bail-out for the banking industry finally won legislative approval today after a week of persuasion, negotiation and horse-trading prompted Congress to reverse its opposition to the plan.

In a resolution which sent Wall Street shares soaring, the House of Representatives comfortably backed the plan by 263 to 171. The vote overturned Monday’s shock result in which congressmen and women opposed the plan by 228 to 205.

The bill, which has already been approved by the Senate, is likely to be signed swiftly by the president and the U.S. Treasury could begin buying banks’ toxic mortgage-based securities as early as next week in an effort to unfreeze the credit market and restore confidence in troubled financial institutions.

On the floor of the New York Stock Exchange, traders gathered around television monitors to watch the vote and there were cheers when it became clear that the bill had been passed. The Dow Jones industrial average rose by 188 points to 10,671. But within a quarter of an hour it had given up almost all of its gains.

Having been accused of inflaming opposition in the first vote through an aggressive speech attacking the Bush administration, the Democratic speaker of the House, Nancy Pelosi, issued a resounding appeal for a “yes” vote today.

“The urgency is clear,” she said, referring to dismal economic conditions. “We hear it from our friends, from our neighbours. We hear it every place we turn.”

Many lawmakers said that the previously overwhelming opposition to the package among constituents had changed. Republican whip Roy Blunt said: “Calls to members’ district offices have begun to even out.”

Support for the package rose among both Democrats and Republicans. John Lewis, a Democrat who switched sides, said: “I have decided that the cost of doing nothing is greater than the cost of doing something.”

John Boehner, the Republican leader in the house, praised a controversial set of tax breaks added to the plan by senators.

“Is the bill perfect? No, but it’s clearly better,” he said. “Most Americans understand we’re facing a serious economic crisis.”

The Guardian

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