Congress on Friday gave Wall Street the financial lifeline it was seeking and President Bush immediately signed it into law, as the House reversed course and approved a $700 billion bailout package in the wake of markets roiled by the failure of storied investment firms and major banks.
The House passed the measure 263-171, 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 among Republicans.
Converts, both Democratic and Republican, said they listened to taxpayers’ concerns and tried to ensure their market investments and mortgages were protected, as well as providing some middle-class tax relief.
Rep. Donna F. Edwards, a Maryland Democrat who on Monday voted against the first bailout package, said conversations she had this week with constituents, as well as a Thursday telephone call from Democratic presidential nominee Sen. Barack Obama, persuaded her to switch her vote to “Yes” Friday.
“I am convinced today that even left with this imperfect product, the choice is this or nothing,” she said. “For me, doing nothing was never an option.”
Democrats, who have made the struggling economy a central theme this election season, loudly praised the legislation, adding that it was only the first step in a long overdue overhaul of Wall Street regulations and oversight that will come with an Obama presidency and a Democratic Congress.
“The message Democrats will continue to pound is how off-track this economy is, and how we can’t risk four more years of Bush economic policies that were rubber-stamped by Republicans in Congress,” said Doug Thornell, spokesman with the Democratic Congressional Campaign Committee (DCCC), the fundraising arm of House Democrats.
The measure was supported by 172 Democrats and 91 Republicans, while 108 Republicans and 63 Democrats opposed it. There were 58 more votes for the measure than an earlier version that failed on Monday.
Thirty-three Democrats and 25 Republicans switched their votes from “No” to “Yes.” One Democrat - Jim McDermott of Washington - switched in the other direction, voting against the bill Friday after supporting it Monday, but that was offset by Rep. Jerry Weller of Illinois, who voted “Yes” on Friday after not voting Monday.
Mr. Obama and his Republican presidential rival Sen. John McCain, who both voted for the package Wednesday, praised the House for its action Friday in separate statements.
“This rescue bill is not perfect, and it is an outrage that it’s even necessary. But we must stop the damage to our economy done by corrupt and incompetent practices on Wall Street and in Washington,” Mr. McCain said.
Mr. Obama said that the bill “was absolutely necessary to prevent an economic catastrophe that could have cost millions of jobs and forced businesses across the country into bankruptcy.”
But U.S. stocks fell heavily Friday, despite rising immediately after the House vote, as investors remained nervous about a global credit squeeze and the weak economy.
The Dow Jones Industrial Average lost 157.47, or 1.50 percent, to close at 10,325.38, while the Nasdaq Composite Index slid 29.33 points, or 1.48 percent, to 1,947.39. Standard & Poor’s 500 Index shed 15.05, or 1.35 percent, to 1,099.23.
And a dismal jobs report Friday showed 159,000 people added to the ranks of the unemployed.