- The Washington Times - Friday, October 3, 2008

BREAKING NEWS, UPDATED:

President Bush has signed the $700 billion bailout package, moments after Congress gave Wall Street the financial lifeline it was seeking when the House reversed course and approved it on Friday.

After a 20-minute visit inside Treasury, the president told reporters outside the building that he had “thanked them for their hard work over the past six weeks in dealing with a serious financial crisis.”

“Mr. Secretary, you and your team have worked incredibly hard … I know that your people are exhausted in there,” Mr. Bush said to Mr. Paulson, who nodded. “Sometimes people in government never get thanked enough.”

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The House passed the measure 263 to 171, following the Senate’s lead in passing a reformulated bill that added tax breaks, an increase in the federal deposit insurance limit and other “sweeteners” designed to increase support for the bill among Republicans.

President Bush hailed the Congress for passing the bill, acknowledging that “there were moments this week when some thought the federal government could not rise to the challenge.

“By coming together on this legislation, we have acted boldly to help prevent the crisis on Wall Street from becoming a crisis in communities across our country,” Mr. Bush said. “We have shown the world that the United States of America will stabilize our financial markets and maintain a leading role in the global economy.”

The president, however, cautioned that “it will take some time for this legislation to have its full impact on our economy.”

“Our economy continues to face serious challenges,” he said. “It will take more time and determined effort to get through this difficult period.”

House Minority Whip Roy Blunt, Missouri Republican said, “It’s not about Wall Street, it about Main Street. It’s not a bailout, it’s a situation where American taxpayers invest money in a way that ensures they have a return.”

House Speaker Nancy Pelosi said the measure was a significant improvement over an initial version that the House stunningly rejected 228-205 on Monday, sending world markets into a tailspin.

“It’s an important vote, it’s a difficult vote, but it’s a vote that we must win for the American people,” said the California Democrat. “We must win it for Mr. and Mrs. Jones on Main Street.

The Senate two days later passed a revised version that included tax breaks, an increase in the federal deposit insurance limit and other “sweeteners” designed to increase support for the bill among Republicans.

House leaders from both parties wrangled to get the extra dozen votes needed to pass the bill throughout the week, with phone calls to members and meetings to shore up existing support and switch votes.

“We were leaving absolutely nothing to chance. The stakes are too high,” said Blunt spokeswoman Antonia Ferrier.

The violent swings in the market and an ease in constituent opposition to the rescue plan also helped win over leery House members on both sides of aisle since they defeated the measure Monday. Newfound support for the bill came from business groups worried about frozen credit and seniors panicked that their nest egg would wither in the stock market.

Rep. Joe Knollenberg, a Michigan Republican facing one of the toughest re-election contests in Congress, delivered a “heartfelt” speech at a conference meeting Friday morning urging his colleagues to follow his lead in switching to a “yes” vote.

“It is the right vote for my district and the right vote for the country,” Mr. Knollenberg said, according to a Republican aide at the meeting.

Rep. Emanuel Cleaver, Missouri Democrat, told MSNBC he was switching his vote to support the bill after hearing constituents’ stories about mounting credit crunch, including from Kansas City officials who said they were unable to issue some bonds.

The White House and congressional leaders had hoped Thursday’s 74-25 Senate vote in favor of the bill would give it new momentum in the House. At least four Republican “no” votes - Rep. Zach Wamp of Tennessee, Rep. John Shadegg of Arizona, Rep. Jim Ramstad of Minnesota and Rep. Ileana Ros-Lehtinen of Florida - announced they intended to vote for the bill, as did Rep. Emanuel Cleaver II, Missouri Democrat.

House Majority Whip James E. Clyburn said after a meeting of House Democrats Thursday evening, he was more confident that the 140 Democrats who voted for the first bailout bill that failed in the House Monday would support the revised version Friday.

“I believe that we are north of (140 votes) today,” the South Carolina Democrat said. “How far north, I have not done a hard count.”

Rep. Donna F. Edward, Maryland Democrat, who voted against the first bailout, said Friday she would reluctantly support the new version.

But House budget hawks oppose many of the provisions, saying the tax cuts must be offset with budget cuts or tax increases elsewhere in the budget.

“We will get through this. We have confronted much greater challenges than this and I am confident we will restore our markets and renew our government,” said Rep. Mike Pence, Indiana Republican. “But we must do so in a manner consistent with the principles that make America great.

A dismal jobs report Friday showing 159,000 people added to the ranks of the unemployed gave weight to the debate.

“We must pass these critical measures to pull our economy back from the precipice and to give workers our help and support as they continue to look for jobs,” House Speaker Nancy Pelosi said before the vote, though she added a partisan tone similar to the speech she was criticized for giving prior to Monday’s failed vote.

“Nine straight months of job losses is a painful verdict on the economic mismanagement of the last eight years,” she said. “We cannot afford a continuation of the failed economic policies that have resulted in these job losses here at home.”

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The core of the Wall Street rescue package, proposed by Treasury Secretary Henry M. Paulson Jr. just two weeks ago, remains intact: The Treasury Department would get up to $700 billion to buy up now-worthless mortgages and mortgage-related securities that are clogging the books of the nation’s banks and financial firms. Until those assets are addressed, Mr. Paulson argued, banks will not lend, consumers and businesses will be unable to borrow, and the aftershocks will be felt in pensions, savings plans, paychecks and payrolls across the country.

Lawmakers say they have improved the original three-page Paulson blueprint, adding several layers of oversight, some relief for homeowners struggling to meet mortgage payments, strict limits on executive pay for those who participate in the plan, and an ownership stake for the federal government in the companies being helped. When the U.S. housing market recovers and the mortgages gain in value, the government stands to recoup at least some of the money spent.

Staff writer Jon Ward contributed to this article.