The 451-page Emergency Economic Stabilization Act grants the Treasury secretary unprecedented authority to buy up to $700 billion of troubled assets from ailing financial institutions in an effort to stave off more bankruptcies and provide cash for new loans to ease the credit market freeze-up.
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New and improved
Lawmakers demanded numerous changes to the Treasury Department's original, three-page proposal, including limits on how much executives may be paid if their firms sell assets to the government. Congress also added an oversight board to supervise the program, raised the cap on Federal Deposit Insurance Corp. account coverage from $100,000 to $250,000, and required steps to help homeowners avoid foreclosure.
Sweeteners added an estimated $150 billion in costs, including a provision that shields 24 million taxpayers from the alternative minimum tax. The new law also has tax relief provisions for disaster victims; research and development tax credits; a hybrid car tax credit; and tax breaks for teachers who spend their own money on school supplies.
Many House members said they were reluctant to help an unpopular industry and approve new federal spending but felt they had no choice.
"Nobody in east Tennessee hates the fact more than me that I'm going to vote 'yes,' " said Rep. Zach Wamp, a Republican who came to favor the bill after helping defeat it in Monday's 228-205 vote. "Things are really bad, and we don't have any choice."
"I am just as angry and frustrated as many of those who have called my office," said Rep. Jerry McNerney (D-Pleasanton), who voted "yes" both times. "But I voted for it because my constituents' 401(k)s, their life savings, and the ability to take out car, home and student loans hang in the balance."
Preparing for the political fallout, Rep. Jim Marshall (D-Ga.) has already begun airing a TV ad in his district in which he declares: "I don't like this rescue plan any more than you do. . . . But I'm not going to stand by and let this crisis undermine our economy and damage the financial future of everyone in America."
Within the California delegation, Democrats voted 26-8 in favor of the bill, while Republicans voted 10-9 in favor. Seven Californians, all Democrats, supported the measure after opposing the earlier version.
Overall, Democrats in the House favored the bill 172-63 in Friday's vote; Republicans voted 108-91 against it.
