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After one spectacular failure, the $700
billion financial industry bailout found a second life Wednesday,
winning lopsided passage in the Senate and gaining ground in the
House, where Republicans opposition softened.


      Senators loaded the economic rescue bill with tax breaks and
other sweeteners before passing it by a wide margin, 74-25, a month
before the presidential and congressional elections.


      In the House, leaders were working feverishly to convert enough
opponents of the bill to push it through by Friday, just days after
lawmakers there stunningly rejected an earlier version and sent
markets plunging around the globe.

Both of Minnesota's senators, Republican Norm Coleman and Democrat Amy Klobuchar, voted for the bailout, arguing that Congress has no choice but to act. 

Coleman, who is locked in a tough re-election
campaign, says the bill is about making sure that capital is
available. Without it, he said, loans for college, cars and homes
would become nearly impossible to obtain.
      

And Coleman said that the bill protects taxpayers and holds Wall
Street accountable, with tough oversight protections.

      Coleman's DFL challenger, Al Franken, said the bill must include
steps to guarantee transparency and oversight in the marketplace.
Franken did not say how he would vote on the bill.

Klobuchar said she supported the bailout "with many reservations." 

"I do not support it to rescue Wall Street," Klobuchar said. "I support it to protect Main Street by averting an economic catastrophe that would otherwise force millions of Americans to lose their jobs, their homes and their retirement savings." 


      The measure didn't cause the same uproar in the Senate, where
both parties' presidential candidates, Republican John McCain and
Democrat Barack Obama, made rare appearances to cast "aye" votes.


      In the final vote, 40 Democrats, 33 Republicans and independent
Sen. Joe Lieberman of Connecticut voted "yes." Nine Democrats, 15
Republicans and independent Sen. Bernie Sanders of Vermont voted
"no."


      The rescue package lets the government spend billions of dollars
to buy bad mortgage-related securities and other devalued assets
held by troubled financial institutions. If successful, advocates
say, that would allow frozen credit to begin flowing again and
prevent a deep recession.


      Even as the Senate voted, House leaders were hunting for the 12
votes they would need to turn around Monday's 228-205 defeat. They
were especially targeting the 133 Republicans who voted "no."


      Their opposition appeared to be easing after the Senate added
$110 billion in tax breaks for businesses and the middle class,
plus a provision to raise, from $100,000 to $250,000, the cap on
federal deposit insurance.


      They were also cheering a decision Tuesday by the Securities and
Exchange Commission to ease rules that force companies to devalue
assets on their balance sheets to reflect the price they can get on
the market.


      There were worries, though, that the tax breaks would cause some
conservative-leaning Democrats who voted for the rescue Monday to
abandon it because it would swell the federal deficit.


      "I'm concerned about that," said Rep. Steny Hoyer, D-Md., the
majority leader.


      As revised by the Senate, the package extends several tax breaks
popular with businesses. It would keep the alternative minimum tax
from hitting 20 million middle-income Americans and provide $8
billion in tax relief for those hit by natural disasters in the
Midwest, Texas and Louisiana.


      It doesn't designate a way to pay for many of the tax cuts,
though, angering the House's band of conservative "Blue Dog"
Democrats.


      Leaders in both parties, as well as private economic chiefs
everywhere, said Congress must quickly approve some version of the
bailout measure to start loans flowing and stave off a potential
national economic disaster.


      "This is what we need to do right now to prevent the
possibility of a crisis turning into a catastrophe," Obama said on
the Senate floor. In Missouri, before flying to Washington to vote,
McCain said, "If we fail to act, the gears of our economy will
grind to a halt."


      Critics on the right and left assailed the rescue plan, which
has been panned by their constituents as a giveaway for Wall
Street, and has little obvious direct benefit for ordinary
Americans.


      Sen. Jim DeMint, R-S.C., a leading conservative, said the step
was "leading us into the pit of socialism."


      Sen. Bernie Sanders of Vermont, an independent who's a
self-described socialist, said the rescue was fundamentally unfair.


      "The masters of the universe, those brilliant Wall Street
insiders who have made more money than the average American can
even dream of, have brought our financial system to the brink of
collapse," Sanders said, and are demanding that the middle class
"pick up the pieces that they broke."


      Still, proponents argued that the financial sector's woes were
already being felt by ordinary people in the form of unaffordable
credit and underperforming retirement savings and without the
bailout would soon translate into even more economic pain for
working Americans, including more job losses.


      "There will be no balloons or bunting or parades," when the
rescue becomes law, said Sen. Chris Dodd, D-Conn., the Banking
Committee chairman. But lawmakers will have "the knowledge that at
one of our nation's moments of maximum economic peril, we acted -
not for the benefit of a particular few, but for all Americans."


      The Senate specializes in high-stakes legislating by enticement,
and the long list of sweeteners it added was designed to attract
votes from various constituencies.


      Tax cuts new and old are favorites for most House Republicans,
the main target of intense lobbying to gain support for the
measure. Help for rural schools was aimed mainly at lawmakers in
the West, while disaster aid was a top priority for lawmakers from
across the Midwest and South.


      Another addition, to extend the deductibility of state and local
taxes for people in states without income taxes, helps Florida and
Texas, among others.


      Increasing the deposit insurance cap was a bid to reassure
individuals and small businesses that their money would be safe in
the event their banks collapsed. It was particularly geared toward
small banks that fear customers will pull their money and park it
in larger institutions seen as less likely to fold.


      The FDIC would be allowed to borrow unlimited money from the
Treasury Department through the end of next year as a way to cover
the increased insurance limit. If used, it would be the first time
the agency has tapped Treasury for a loan since the early 1990s.


      Raising the limit - along with the SEC's decision to ease
accounting rules on valuing assets - helped House Republicans claim
credit for some substantive changes.


      And with constituent feedback changing dramatically since
Monday's shocking House defeat and the corresponding market plunge,
lawmakers' comfort level with the package increased markedly.
      

Gallery

Senate schedules vote on bailout bill for Wednesday

Stock market storms back, but credit still tight

Candidates search for answers on the economy

Fingerpointing continues on bailout failure

Business and Economic News

The Senate has passed a $700 billion bailout
for the financial industry aimed at preventing the economy from
plunging into a recession. The vote passed by a wide margin of 74-25, including 'yes' votes from both Sen. Norm Coleman and Sen. Amy Klobuchar.

Senate passes sweetened $700B market bailout

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