U.S. lawmakers try to revise bailout plan

Wednesday 01st October, 07:10 AM JST

WASHINGTON —

Congressional leaders scrambled Tuesday to come up with changes to help them sell the failed $700 billion U.S. financial bailout to rank-and-file members. One idea gathering support: raise the federal deposit insurance limit to reassure nervous savers and help small businesses.

Presidential rivals John McCain and Barack Obama announced separately that they support a plan that some House Republicans had pushed earlier: raising the limit from $100,000 to $250,000. Within hours, the Federal Deposit Insurance Corp chairman asked Congress for temporary authority to raise the limit by an unspecified amount.

That could help ease a crisis of confidence in the banking system, said chairman Sheila Bair.

President George W Bush spoke with both nominees during the day and made another statement in the White House. “Congress must act,” he demanded in front of the cameras.

European and Asian leaders, whose economies face growing uncertainty after the defeat of the U.S. relief package, urged the United States to find a quick solution for the good of its economy and the global financial system.

As the pace of legislative jockeying quickened, the atmosphere on Wall Street seemed to be improving. The Dow Jones industrials rose nearly 500 points on the day after it had plunged 788. But more attention was on credit markets as a key rate that banks charge each other shot higher, further evidence of a tightening of credit availability.

“I recognize this is a difficult vote for members of Congress,” Bush said. “But the reality is we are in an urgent situation and the consequences will grow worse each day if we do not act.”

Republican House aides said the FDIC proposal might attract some conservatives who want to help small business owners and avert runs on banks by customers fearful of losing their savings.

House Republican leader John Boehner welcomed McCain’s and Obama’s embrace of a higher insurance cap, saying congressional Democrats had rejected it Saturday.

Another possible change to the bill would modify “mark to market” accounting rules. Such rules require banks and other financial institutions to adjust the value of their assets to reflect current market prices, even if they plan to hold the assets for years.

Some House Republicans say current rules forced banks to report huge paper losses on mortgage-backed securities, which might have been avoided.

Liberal Democrats who opposed the bill are suggesting other changes. Their ideas include extending unemployment insurance and banning some forms of “short selling,” in which investors bet that a stock’s value will drop.

The White House signaled a willingness to accept some changes to the bill. Spokesman Tony Fratto said there are plenty of good ideas to help the financial markets and “we’re going to look at all of those.”

Senate Banking Committee Chairman Christopher Dodd, a Democrat, told reporters, “I’m told a number of people who voted ‘no’ yesterday are having serious second thoughts about it.” He added, however, “There’s no game plan that’s been decided.”

Senate Republican Leader Mitch McConnell said it was time for all lawmakers to “act like grown-ups, if you will, and get this done for all of the people.” He predicted a bill would pass this week, although the House, not the Senate, is the focus of the dispute.

The House on Monday balked at approving the measure, pilloried in many quarters as a handout to big business. The 228-205 vote sparked the largest sell-off on Wall Street since shortly after the Sept 11, 2001, terror attacks.

Bush noted that the maximum $700 billion in the proposed bailout was huge, but was dwarfed by the $1 trillion in lost wealth that resulted from Monday’s stock market plunge.

“Because the government would be purchasing troubled assets and selling them once the market recovers,” he said, “it is likely that many of the assets would go up in value over time. Ultimately, we expect that much—if not all—of the tax dollars we invest will be paid back.”

“The dramatic drop in the stock market that we saw yesterday will have a direct impact on retirement accounts, pension funds and personal savings of millions of our citizens,” Bush said. “And if our nation continues on this course, the economic damage will be painful and lasting.”

Some lawmakers reported a shift in constituent calls pouring into their offices. Calls and e-mails were overwhelmingly opposed to the rescue plan before Monday’s vote, many offices said. But Monday’s stock market dive prompted calls Tuesday from Americans furious about Congress’ inaction, some said.

___

Associated Press writers Tom Raum, Ben Feller, Andrew Taylor and Julie Hirschfeld Davis contributed to this report.

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Latest 15 of 32 Total Comments Show All

SushiSake3 at 03:56 PM JST - 1st October

sarge - "He didn't get involved because he's clueless as to what to do about the problem his cheating advisors helped create."

I think you and john mccain are the ones who are clueless.
chibaman at 04:03 PM JST - 1st October

bush, who has long enjoyed the undying support of his loyal Republicans, finds himself near-totally deserted in his finest hour of complete and utter failure as the final weeks of his final term disappear deep into the murky depths of abject, complete and total failure-soaked political nothingness.

Here here!
SushiSake3 at 04:08 PM JST - 1st October

And it just gets better for America -

"Now, with the financial crisis front and center, Bush has reappeared on the landscape and the race is no longer an Obama referendum.

The damage is registering powerfully on the electoral map and in state and national polling, officials say. McCain has lost ground in at least eight key swing states, and the officials say his path to victory is so narrow that it allows virtually no room for error.

Recent polls have shown Obama ahead in Colorado, Michigan and Pennsylvania, with gains in Florida, Virginia, North Carolina, Indiana and New Mexico.

Two recent national tracking polls – from Gallup and The Hotline – both show Obama enjoying a six-point lead. A Washington Post-ABC News poll out Tuesday night showed Obama with a four-point advantage among likely voters (50 to 46), down from an anomalous nine points the week before."
SushiSake3 at 04:27 PM JST - 1st October

FREE SARAH PALIN!

Ehhrr....does anyone know where Sarah Palin is???
chardk1 at 04:37 PM JST - 1st October

What has been fascinating to me is hearing House minority leader John Boehrner and John McCain complain that the Democrats are responsible for the bill failing because Pelosi and Obama weren't persuasive enough in getting more Republicans to buy into the bailout. Uh guys, so at this critical time, on this critical issue, after you claimed this was the only thing you would be working on, your excuse is that the Democratic leaders in Congress didn't do your jobs for you?

It's getting pretty obvious how McCain's "bipartisan leadership" operates - say "I'm da bipartisan leader" loudest and oftenest and challenge the Democrat counterpart to actually do all the heavy lifting for both parties so you can take credit for everything if it works and blame the other guy if it doesn't, and all throughout do a lot of press conferences bragging about how you get results when in fact you can't even get a single congressman from your own state in your own party to support you on the solution you endorsed for the self-proclaimed biggest financial crisis of the past 80 years. That's some fine leadership.
zurcronium at 04:51 PM JST - 1st October

sushi,

we need to immediately identify every house that can be seen from Russia in order to find her!

seriously, she will resign soon. Even the republicans want her gone now. The sane ones.
zurcronium at 04:55 PM JST - 1st October

sushi, will bush break the obuchi support rating of 9 percent? Its possible. He has five more months to screw up and destroy something else beyond the government, the military, the economy, the schools, the medical industry, the reputation of the US abroad, North Korea, the middle east, Iraq, Iraq and last Iraq.
SushiSake3 at 05:01 PM JST - 1st October

First there was FREE TIBET!

Now it's **FREE SARAH PALIN! **

Zurc, I hear she and her family (including someone called "Willow") are down on mccain's ranch learning stuff she's never known before to prep up for tomorrow's debate against Joe Biden.

'pparently, the first thing she was instructed to remember was that humans did NOT, in fact, co-exist with dinosaurs as she has apparently claimed:

www.huffingtonpost.com/2008/09/28/palin-claimed-dinosaurs-an130012.html

and some irrelevant stuff about Supreme court cases:

www.huffingtonpost.com/2008/09/29/latest-palin-gaffe-cant-nn130395.html
chibaman at 05:52 PM JST - 1st October

SushiSake do you post all your stuff elsewhere as well? Cos you could bury Palin (and clowns) with the dinosaurs with your efforts. Keep it up, and down with stupid choices for the future.
Sarge at 07:29 PM JST - 1st October

chibaman - Do you have anything to say about the topic at hand, which is the U.S. taxpayers' bailout of Wall Street?
Hotbox08 at 10:10 PM JST - 1st October

I read this on Yahoo:

Based on the U.S. Census Bureau's estimate of the current population of about 305 million people, each person would have to pay $2,300 to fund the $700,000,000,000. If each American (including children) paid a dollar a day, it would take more than six years to pay the money in full. One might argue, however, that this $700 billion would be a modest splash in the bucket of national debt, which already stands at well over $9 trillion (which means you already owe $31,642 each).

Wow! American taxpayers are in deep doo doos.
taniwha at 10:31 PM JST - 1st October

Taxes, taxes, taxes...the very poor don't pay taxes... Not putting all that into quotes, but I am just summarizing a section of this thread and one of the central themes in it.

Let me tell you all, everyone pays taxes. Even the very very poor, well if they don't they soon will, if they are going to live.

Here's a few ways that most everyone is going to be taxed and taxed and taxed. 1. I don't think America has ever had anything like GST? or VAT? Could be wrong. Someone can correct me if you like. But these are all forms of tax added to things you buy, principally food, and beverages, and those luxury goods that even the very poor want to buy, and here I'm talking about tobacco. 2. I call this a tax but its really a negative tax, a way for the State to keep money it formerly had to spend on you. I've mentioned most of them here before, they are the remaining vestiges of Roosevelt's New Deal, social security itself (and here think Superannuation). Other funding types to be slashed include the following: Medicare. Medicaid, and funding usually given out to education, public transportation, the national parks/environment, etc. These will all be slashed to ribbons.

Yes, if that bailout goes through Americans are going to pay for it, and that means extracting money from where-ever it can be found out of the system - I mean the one you live within.

Barack Obama and the Democrats have supported the Republican concept of a bailout from the get go. You have to wonder why too, since its the Democrats who control both sides of the house! If they really were concerned at all about their support base amongst the RAPIDLY growing ranks of the working class you would think they would have backed an option that their supporters would support. And principles have nothing to do with it, because those who benefit directly from this bailout are the Goldman Sachs of Wall Street. But only for a limited time.
Sarge at 12:03 AM JST - 2nd October

"American taxpayers are in deep doo doos"

That's why we're going to eliminate foreign aid. Nyuk nyuk nyuk!

This bailout plan is so bad, 90 some Democrats voted against it.
SushiSake3 at 12:09 AM JST - 2nd October

Sarge - "That's why we're going to eliminate foreign aid."

But in recent weeks you've been proclaiming American foreign aid to China and Africa as good!

Why the 180-degree U-turn?
Sarge at 12:18 AM JST - 2nd October

Sushi - Apparently you don't know what "Nyuk nyuk nyuk!" means. It means I was kidding. Of course we're not going to eliminate foreign aid. Especially to China. Wait a minute, don't we owe China $500 billion? Why are we giving aid to China? Heck, they should be giving aid to us!