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Sandmannd

Congress OKs historic bailout bill

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By JULIE HIRSCHFELD DAVIS and DAVID ESPO, Associated Press Writers

WASHINGTON - With the economy on the brink and elections looming, Congress approved an unprecedented $700 billion government bailout of the battered financial industry on Friday and sent it to President Bush for his certain signature.

The final vote, 263-171 in the House, a comfortable margin that was 58 more votes than it garnered on Monday. The vote capped two weeks of tumult in Congress and on Wall Street, punctuated by daily warnings that the country confronted the gravest economic crisis since the Great Depression if lawmakers failed to act.

Bush was poised to make a statement on the historic vote.

"We all know that we are in the midst of a financial crisis," House Republican Leader John Boehner of Ohio, said shortly before casting his vote for government intervention in private capital markets that was unthinkable only a month ago.

"And we know that if we do nothing, this crisis is likely to worsen and to put us into an economic slump like most of us have never seen."

Speaker Nancy Pelosi, D-Calif., said the bill was needed to "Begin to shape the financial stability of our country and the economic security of our people."

Stocks were up on Wall Street, where there was a lot of anticipation of the vote but where investors also were buffeted by a bad report on the job market. The Labor Department said employers slashed 159,000 jobs in September, the largest cut in five years and further evidence of a sinking economy.

Even before the measure cleared Congress, the White House sought to dampen optimism of its immediate impact on the economy. "This legislation is to fix a problem in our financial markets," said spokesman Tony Fratto. "It's not sold as giving a boost to the economy, but rather preventing a crisis in our economy... If it works as we hope it will, credit will be able to begin flowing again."

The House vote marked a sharp change from Monday, when an earlier measure was sent down to defeat, largely at the hands of angry conservative Republicans.

Senate leaders quickly took custody of the measure, adding on $110 billion in tax and spending provisions designed to attract additional support, then grafting on legislation mandating broader mental health coverage in the insurance industry. The revised measure won Senate approval Wednesday night, 74-25, setting up a furious round of lobbying in the House as the administration, congressional leaders, the major party presidential candidates and outside groups joined forces behind the measure.

It worked — augmented by a sudden switch in public opinion that occurred after the stock market took its largest-ever one-day dive on Monday.

"No matter what we do or what we pass, there are still tough times out there. People are mad — I'm mad," said Republican Rep. J. Gresham Barrett of South Carolina, who opposed the measure the first time it came to a vote. Now, he said, "We have to act. We have to act now."

Rep. John Lewis, D-Ga., another convert, said, "I have decided that the cost of doing nothing is greater than the cost of doing something."

Critics were unrelenting.

"How can we have capitalism on the way up and socialism on the way down," said Rep. Jeb Hensarling of Texas, a leader among conservative Republicans who oppose the central thrust of the legislation — an unprecedented federal intervention into the private capital markets.

It was little more than two weeks ago that Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke concluded that the economy was in such danger that a massive government intervention in the private markets was essential.

The core of the plan remains little changed from its inception — the Treasury Department would have $700 billion at its disposal to purchase bad mortage-related securities that are weighing down the balance sheets of institutions that hold them. The flow of credit has slowed, in some cases drying up, threatening the ability of businesses to conduct routine operations or expand.

At the same time, lawmakers have dramatically changed the measure, insisting on greater congressional supervision over the $700 billion, taking measures to protect taxpayers, and insisting on steps to crack down on so-called "golden parachutes" that go to corporate executives whose companies fail.

Earlier in the week, the legislation was altered to expand the federal insurance program for individual bank deposits, and the Securities and Exchange Commission took steps to ease the impact of the questionable mortgage-backed securities on financial institutions.

In the moments before the vote, Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee, pledged "serious surgery" next year to address the underlying causes of the crisis.

If anything, the economic news added to the sense of urgency.

The Labor Department said initial claims for jobless benefits had increased last week to the highest level since the gloomy days after the 2001 terror attacks. The news of the payroll cuts came on top of Thursday's Commerce Department report that factory orders in August plunged by 4 percent.

Typifying arguments the problem no longer is just a Wall Street issue but also one for Main Street, lawmakers from California and Florida said their state governments were beginning to experience trouble borrowing funds for their own operations.

Pelosi said, "We must win it for Mr. and Mrs. Jones on Main Street."

One month before election day, the drama unfolded in an intensely political atmosphere.

Democratic presidential candidate Barack Obama, a supporter of the bill, made calls to members of the Congressional Black Caucus, who publicly credited him with changing their minds.

Rep. Elijah Cummings and Donna Edwards, both Maryland Democrats, were among them. They said Obama had pledged if he wins the White House that he would help homeowners facing foreclosure on their mortgages. He also pledged to support changes in the bankruptcy law to make it less burdensome on consumers.

"It's not too often you get the future president telling you that his priority matches your priority," said Cummings.

Obama's rival, Sen. John McCain, who announced a brief suspension in his campaign more than a week ago to try and help solve the financial crisis, made calls to Republicans. His impact was not immediately clear.

Republican Rep. Sue Myrick of North Carolina, who said she was switching her vote to favor the measure, said of McCain: "They told me he was going to call me. He didn't."

Looking ahead to election day, she added, "I may lose this race over this vote, but that's OK with me. This is the right vote for the country."

The White House issued the latest in a series of grim warnings of the risks of defeat. "If the financial markets fail to function, American families will face great difficulty in getting loans to purchase a home, buy a family car or finance a child's education," it said in a written statement.

The vote on Monday staggered the congressional leadership and contributed to the largest one-day stock market drop in history, 778 points as measured by the Dow Jones Industrial Average.

Across the Capitol, Senate leaders reacted quickly, deciding to sweeten the bill with a series of popular tax breaks as well as spending on rural schools and disaster aid. They also grafted on a bill to expand mental health coverage under private insurance plans.

At the same time, the change in federal deposit insurance and the action by the SEC on an obscure accounting rule helped produce a steady trickle of converts.

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Wooo-hooo!! The bailout passed! rolleyes.gif

Tax breaks for:

Manufacturers who produce wooden arrows for children - $2 Million

Auto racetrack owners - $100 Million

$192 million in rebates on excise taxes for the Puerto Rican and Virgin Islands rum industry

$148 million in tax relief for U.S. wool fabric producers

$49 million tax benefit for fishermen and other plaintiffs who sued over the 1989 tanker Exxon Valdez spill

Renewal of a tax incentive worth worth $478 million over 10 years for film and TV producers who produce their work in the United States

Allows certain corporations to reduce their tax liability on income earned in American Samoa, at a cost of $33 million over two years

There's money for railroad track maintenance too. Senator Chuck Schumer announced it in a press release; $5 million a year through 2013 for railroad safety infrastructure improvements across the country.

"These are things that might not pass on their own," said Hardwick. "They might not get a majority of people to vote for them." -> Unbelievable!!!

~~~~~~~~

A simple bill that started at three pages grew to 451. Boy, that sure sounds like a well laid plan for getting the economy back on track. I mean, who doesn't like wooden arrows and rum while watching 'The View'?

blow_up.gif

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wooden arrows huh...well they would benifit hunters! right? laugh

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No, they're children's arrows.

So much for the big bailout. Right now the dollar is down and so is the stock market. Nice job boys. This bill was nothing but a glorified tax bill when it was all done with. Way to grease up the public with fear mongering so they could slide in the pork and earmarks they couldn't get into to previous or upcoming bills before the session was over for the year. waytogo.gif

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Pelosi says "this bill is just a start".

Peolsi represents California.

Now California wants a $700B "loan".

Where does it end ?

IMO it should never have started.

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Why are we cutting taxes from forein rum makers? What about all the other junk? Why can't they pass one simple bill? This is what's wrong with politics.

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Why are we cutting taxes from forein rum makers? What about all the other junk? Why can't they pass one simple bill? This is what's wrong with politics.

I completely agree. This is one of the biggest problems with politics and it should stop

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Why are you surprised and outraged? this is how our politics been since the founding of this country. Even when the fathers were debating if they should declare indpendence from GB. And when writing teh Articles of the confederation to the Constitution to this plan. There was never a straight line bill for anything.

On the funny side, pork is delicious, I'm more of a beef guy but I can appericate a tasty pork.

Ok back to the seriousness, lets not start blaming each other. We are suppose to fight this as a country. All this talk about repu and demo at fault, I can go and fight with the best of you but that does us no good. Lets not forget this plan was the baby of Bush(republican) and the democrats are gona back him up.

As both parties united to help or destory American society, we need to either stand up to them as a whole or crublem as a bunch of blue and red pieces.

Please, anyone who has a very feasible idea...Please share it. I'm no expert when it comes to economics but wish to be educated in a objective way.

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I disagree. Pass the bill for what is needed and quit throwing your pet projects in. Tossing more of our money around is worse than doing nothing.

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I'm a little disappointed that Jim Ramstead voted yes for this bill...but I don't blame him at all. There was a provision for funding something he has worked for for most of his career. I trust in his judgement, even though I'm a liberal I've voted for Ramstead every election I voted in.

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From the recent news report it sounded like the frist wave average people like you and me were calling in saying how much we were against it. After the frist defeat a lot of business owners were calling in to congress saying their credit was tightening up, they weren't gona be able to pay employees, lay offs might begin....etc.

Now i dont know what to think

*sigh*

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I repeat myself....NO IT DIDN'T!

I REPAT MY SELF AGAIN! ....YES IT DID! ...

LOL...LOL...

GOT YA !!!

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I agree something had to be done to inject some liquidity to keep business moving forward. This wasn't it and we lost another major bullet. If we keep printing dollars based on debt, inflation will run wild and we will have the return of stagflation.

frown

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LMIT, in your opinion, who is sponsoring/supporting this move to communism?

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I know I called all my representatives in WI and said I wanted them to know I expected a "No" vote from them. Of all People, RUSS FEINGOLD voted no.

The rest didn't listen to their constituants...why? because we haven't thrown any of them out on their kiesters for not doing the buisness we sent them their to do!

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20 SEC. 503. EXEMPTION FROM EXCISE TAX FOR CERTAIN

21 WOODEN ARROWS DESIGNED FOR USE BY

22 CHILDREN.

23 (a) IN GENERAL.—Paragraph (2) of section 4161(B)

24 is amended by redesignating subparagraph (B) as sub

1 paragraph © and by inserting after subparagraph (A)

2 the following new subparagraph:

3 ‘‘(B) EXEMPTION FOR CERTAIN WOODEN

4 ARROW SHAFTS.—Subparagraph (A) shall not

5 apply to any shaft consisting of all natural

6 wood with no laminations or artificial means of

7 enhancing the spine of such shaft (whether sold

8 separately or incorporated as part of a finished

9 or unfinished product) of a type used in the

10 manufacture of any arrow which after its as11

sembly—

12 ‘‘(i) measures 5/16 of an inch or less in

13 diameter, and

14 ‘‘(ii) is not suitable for use with a bow

15 described in paragraph (1)(A).’’.

16 (B) EFFECTIVE DATE.—The amendments made by

17 this section shall apply to shafts first sold after the date

18 of enactment of this Act.

Somebody PLEASE explain to me and the rest of the world why this is in this bill?

bang_head.gif

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Oh, there's more little gems than that, LMITOUT:

Bailout type Cost to taxpayers (Source: Reuters)

Financial bailout package approved this week up to or more than $700 billion

Bear Stearns financing $29 billion

Fannie Mae and Freddie Mac nationalization $200 billion

AIG loan and nationalization $85 billion

Federal Housing Administration housing rescue bill $300 billion

Mortgage community grants $4 billion

JPMorgan Chase repayments $87 billion

Loans to banks via Fed's Term Auction Facility $200 billion+

Loans from Depression-era Exchange Stabilization Fund $50 billion

Purchases of mortgage securities by Fannie Mae and Freddie Mac $144 billion

POSSIBLE TOTAL $1.8 trillion+

NUMBER OF HOUSEHOLDS PER U.S. CENSUS 105,480,101

POSSIBLE COST PER HOUSEHOLD $17,064+

That includes, as the New York Post pointed out, millions in tax breaks and related pork for kids' wooden arrows, Puerto Rican rum producers, auto race tracks, and corporations operating in American Samoa. (The likely explanation for the latter: StarKist has a large tuna-canning operation in American Samoa. And StarKist's parent company happens to be located in the district of House Speaker Nancy Pelosi.)

IRS undercover operations: Privacy invasion?

The bailout bill also gives the Internal Revenue Service new authority to conduct undercover operations. It would immunize the IRS from a passel of federal laws, including permitting IRS agents to run businesses for an extended sting operation, to open their own personal bank accounts with U.S. tax dollars, and so on. (Think IRS agents posing as accountants or tax preparers and saying, "I'm not sure if that deduction is entirely legal, but it'll save you $1,000. Want to take it?") That section had expired as of January 1, 2008, and would now be renewed.

Starting with the so-called Anti-Drug Abuse Act in 1988, the IRS has possessed this authority temporarily, with occasional multiple-year lapses. A 1999 internal report said the IRS had 126 "trained undercover agents" working in field offices at the time. This is the first time that such undercover authority would be made permanent.

There's another section of the bailout bill worth noting. It lets the IRS give information from individual tax returns to any federal law enforcement agency investigating suspected "terrorist" activity, which can, in turn, share it with local and state police. Intelligence agencies such as the CIA and the National Security Agency can also receive that information.

The information that can be shared includes "a taxpayer's identity, the nature, source, or amount of his income, payments, receipts, deductions, exemptions, credits, assets, liabilities, net worth, tax liability, tax withheld, deficiencies, overassessments, or tax payments, whether the taxpayer's return was, is being, or will be examined or subject to other investigation or processing, or any other data received by, recorded by, prepared by, furnished to, or collected by the Secretary with respect to a return."

Also:

• This may be just the beginning of bailouts. California Gov. Arnold Schwarzenegger said on Thursday that the state may need a $7 billion loan from the U.S. Treasury, according to a report in the Los Angeles Times. That's because the state has spent more than it takes in through tax revenue, with an annual budget deficit of $14 billion or more, even though its individual income tax rate is arguably the highest in the nation.

• CBS News' John Bentley reports from Arizona that Republican presidential candidate John McCain is taking some credit for the bailout's passage: "I'm glad I suspended my campaign and went back to Washington to bring, and help bring, House Republicans to the table," he said on Friday. Democratic presidential candidate Barack Obama described the law as "absolutely necessary to prevent an economic catastrophe."

• Rep. Ron Paul of Texas, who correctly predicted in 2003 that taxpayers would be "forced to bail out investors," said in a speech on the House floor that the legislation would "only further harm the economy" and was actually worse than the previous version. In a CNN interview, the former Republican presidential candidate said his colleagues are refusing to deal with the underlying problems and spending more tax dollars even though "this country's bankrupt."

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Oh I know, I've read/skimmed through all 451 pages. Unfortunately it is one big amendment so you have to reference the original bills to get the total picture of what they are trying to mess up.

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They had to do something.....doing nothing would have been worse IMO

I would rather have seen Rome burn. Sad to say, but the world is over populated as it is, ignorance and stupidity are running rampant, about time for mother earth to clean house.

Our government.

Looking out for you.

LOL

The world needs an enema.

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Basically folks we are screwed. All this bailout/rescue effort is going to do is teach the fools and sharks in this country that they can do as the please and when it doesn't work the govt will send them more money. This will happen again and again until people feel the full pain of their errors.

Until the core issues are corrected this will only slightly delay what is going to happen anyway.

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