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Hopes rise in Congress for bailout package

Time is GMT + 8 hours
Posted: 1-Oct-2008 07:26 hrs

Chairman of the US House Banking Committee Sen. Christopher Dodd gets in an elevator after speaking to reporters on Capitol Hill in Washington, DC. Shellshocked leaders in Congress said Tuesday they could pass a revised 700 billion dollar Wall Street bailout within days, after their first attempt failed, sparking fears of economic catastrophe.

Shellshocked leaders in Congress said Tuesday they could pass a revised 700 billion dollar Wall Street bailout within days, after their first attempt failed, sparking fears of economic catastrophe.

Top Democratic and Republican leaders consulted one another and White House officials a day after the political storm and stockmarket rout set off by the House of Representatives' shock vote on Monday.

Democratic Speaker Nancy Pelosi and the top Senate Democrat Harry Reid told President George W. Bush in a letter that they would keep working with him to revive the bill, which fell by 228 votes to 205 in the House.

"Working together, we are confident we will pass a responsible bill in the very near future," they said.

Chris Dodd, chairman of the Senate Banking Committee, said leaders in both chambers were working on the timing of bringing amended bailout legislation up for a vote.

"I am quite confident that we are moving in the right direction, and that we should end up with a very positive outcome in the next 24 or 48 hours," Dodd said.

"I do know that some of those who cast votes yesterday are having second thoughts about the situation that they placed us in."

Former Democratic presidential candidate John Kerry said meanwhile that the Senate may even take up the revised bill as early as Wednesday evening, before the House, in a reversal of normal practice for a revenue bill.

"It is even possible that the US Senate may proceed with this tomorrow night, that has not yet been decided, that is one of the options on the table," Massachusetts Senator Kerry said at a press conference.

Introducing the bill in the Senate first might build momentum, but could also risk angering lawmakers who might be thinking of switching their no-vote.

The package is more likely to have an easier ride in the Senate, as only a third of its members are up for reelection on November 4, and may have fewer qualms about voting for the unpopular measure.

The House does not resume business until Thursday, after the Jewish holiday of Rosh Hashanah, but Reid has said some Senate votes could be held on Wednesday after sundown.

House Democratic majority leader Steny Hoyer and Republican whip Roy Blunt meanwhile plan to meet on Wednesday morning to discuss next steps on framing a new recovery package.

Earlier, Reid has told his colleagues "the blame game needs to end," referring to fierce recriminations which erupted after the House vote.

Reid's Republican counterpart Senator Mitch McConnell warned lawmakers to stop "finger pointing."

"This financial crisis is going to be dealt with by Congress and it's going to be dealt with by Congress this week."

In the first glimmer of hope for a breakthrough, House Republican leader John Boehner backed a suggestion by White House rivals Barack Obama and John McCain that Federal Deposit Insurance Corporation (FDIC) deposit protection be extended to from 100,000 dollars to 250,000 dollars.

"The presidential candidates' support for increasing the FDIC cap is welcome news," Boehner said in a statement, accusing the Democrats of rejecting the idea in earlier bailout negotiations.

Republican leaders have said that raising the cap may convince some more of their number to reverse their votes and support the bailout.

But Democratic rebels who joined in an unusual alliance with conservative Republicans to scupper the bailout bill, agreed in intense weekend talks with Bush aides, warned they would not change their mind.

Oregon Democrat Peter DeFazio called on the Bush administration to fund an alternative bailout plan using money drawn from Wall Street itself and not the taxpayer.

"I have no regrets, that is one of the best votes of my career," he said.

Earlier, Bush pleaded with lawmakers to accept that inaction would deepen the US financial crisis.

"The reality is that we are in an urgent situation, and the consequences will grow worse each day if we do not act," he said.

The proposal would have given Treasury Secretary Henry Paulson authority to buy up toxic mortgage-related assets in troubled banks in hopes of easing the flow of credit.

The bill would have immediately released 250 billion dollars to enable the government to buy up troubled assets, and sets a ceiling for all purchases of 700 billion dollars.

It also includes restrictions on "golden parachutes" for CEOs. — AFP