A showdown is looming in Congress.
Two days after the House rejected a $700 billion financial services bailout bill by a vote of 228 to 205, the Senate will be voting this evening on a slightly revised package in the hopes of pushing the controversial legislation forward.
Lawmakers said the new package will include tax breaks for businesses, users of alternative energy, and hurricane victims as well as relief from the alternative minimum tax. It would also raise the limit on Federal Deposit Insurance Corp.-insured bank accounts to $250,000 from $100,000 for one year.
“Senate Democrats and Republicans believe it is essential that we work quickly on this important legislation to restore confidence to our financial system and strengthen the economy,” Senate Majority Leader Harry Reid, D-Nev., said in a statement.
The presidential candidates, Sen. John McCain, R-Ariz., and Sen. Barack Obama, D-Ill., will be on hand for the vote.
But even if the bill passes the Senate, it won’t be easy to get the legislation passed into law.
In a news conference Tuesday, defiant House Democrats vowed they would not be bullied into rushing through legislation they don’t feel is in the best interest of taxpayers.
“It’s rumored that the Senate intends to jam through the same bill only with a change in the FDIC limit Wednesday night,” said Rep. Peter DeFazio, D-Ore. “I think there are still going to be tremendous problems in the House.”
“We want a good bill, not a fast bill,” concurred Rep. Marcy Kaptur, D-Ohio.
Observers speculate that many politicians, fearful about the upcoming election, may still be reluctant to back a bill that many American voters see as bailing out Wall Street fat cats rather than Main Street.
Indeed, traffic on the House of Representatives “Write a Rep” webpage was so overwhelming following Monday’s vote that it jammed the site, forcing it to post a message that read: “The House of Representatives is currently experiencing an extraordinarily high amount of e-mail traffic. The Write Your Representative function is therefore intermittently available. While we realize communicating to your Member of Congress is critical, we suggest attempting to do so at a later time.”
The vast majority of the e-mails received were reportedly against the bailout.
Despite this, Bob Bach, chief economist with Grubb & Ellis Co., a commercial real estate services and investment company based in Santa Ana, Calif., voiced the view of many in the financial services sector, saying it’s critical a bill is passed to address the meltdown in the markets.
“When the economy is already fragile — this could be enough to top it over,” he said.
Although he doesn’t believe the country would move into a depression, Mr. Bach believes that unless a bailout is passed, the credit and financial crisis will affect average Americans.
“Their credit card limits will be pared. They won’t be able to get auto loans or the rates will be much higher, and mortgage loans will be even harder to get — but I don’t think the people on Main Street believe that,” he said.
“Eighty percent of America doesn’t believe the 20% that’s saying the sky is falling.”
Tom James, chairman and chief executive of Raymond James Financial Inc. of St. Petersburg, Fla., is also calling for the bill’s passage.
“I think it’s actually unbelievable that the markets have survived this unprecedented carnage,” he said in a statement. “The public does not seem to understand that we stand on the precipice of a major financial collapse because normal business operations can’t be conducted without some credit.”
The Senate vote will be held after sundown due to the Jewish holiday, Rosh Hashana.
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