House Votes “Yes” to Historic Bailout

The House of Representatives approved the $700 billion bailout plan by a 263 to 171 vote Friday. A revised version of the rescue bill passed a Senate vote late Wednesday evening, with 74 lawmakers approving the package in a roll call vote; 25 voted against. The new bailout package, however, wasn’t exactly changed from the bill shot down by the House vote Monday: it includes tax breaks for businesses and an increased limit on government-insured bank deposits to $250,000 from $100,000. Federal Deposit Insurance Corporation chairman Sheila Blair said Tuesday that an increase in government bank insurance would restore public confidence and keep cash deposited in banks. It seemed to provide enough confidence to pass the Senate vote, and the House vote agreed. The Senate garnished the bailout with more than $100 billion in business tax breaks for research, development and employment of renewable energy sources before the House could vote again Friday. In a final measure to appeal to reluctant House members, the Senate wrapped up the whole package as an amendment to an existing mental health bill. “We’ve made this bill better,” House Republican leader John Boehner of Ohio told the Las Angeles Times. “Is it perfect? No. But it clearly is better than it was a week ago.” The bill still awaits the signature of President Bush — as soon as this evening, according to breaking reports — before becoming law. If signed into law, the bill will essentially complete a nationalization of the U.S. mortgage market — with the government’s seizure of twin mortgage finance giants Fannie Mae (FNM) and Freddie Mac (FRE) a few weeks ago, the only market left that the government does not already own is the now-dead market for private-party subprime and Alt-A mortgages and the securities they back. With reports from Kelly Curran and Diana Golobay. Disclosure: The authors held no relevant positions when this story was published. Indirect holdings may exist via mutual fund investments. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.