Font ResizeWASHINGTON — The House of Representatives approved the $700 billion Wall Street bailout Friday, setting in motion the biggest government intervention in the financial system since the Great Depression as lawmakers anxiously awaited the economic and political impact.
President Bush quickly signed the bill, and Treasury Department officials vowed to move swiftly to use sweeping new powers to try to stabilize markets and ease deepening fears about the economy.
The vote took place amid fears that the financial turmoil was paralyzing sources of credit vital to businesses, governments and consumers. Underscoring that concern, California Gov. Arnold Schwarzenegger warned this week that his state might need an emergency federal loan because of the crisis.
The House's 263-171 vote was a sharp reversal from Monday, when the chamber rejected a similar bill and the Dow Jones industrial average plunged 777 points. Lawmakers from both parties described Friday's vote, coming a month before they face re-election, as among the most gut-wrenching of their career.
"I may lose my race over this," Rep. Sue Myrick, R-N.C., who voted for the bill Friday after opposing it earlier in the week. "But that's OK. Because I believe in my heart I'm doing the right thing."
Proponents sought to portray the measure as important to ordinary Americans even as some made clear their contempt for Wall Street's recklessness.
"Those greedy pigs on
Before Monday's vote, Congress had been deluged with calls and e-mails from constituents opposed to the bailout plan, but Monday's stark market drop was greeted by public outrage and led to four days of heavy lobbying for the proposal. Senate leaders added tax breaks and other sweeteners to the measure and passed it Wednesday. On Friday, the bill won 58 new yes votes in the House, clinching passage.
"We have acted boldly to help prevent the crisis on Wall Street from becoming a crisis in communities across our country," Bush said.
Nonetheless, markets closed down Friday, reflecting broader economic uncertainty and worries about a government report showing that unemployment rose sharply in September.
The 451-page Emergency Economic Stabilization Act grants the Treasury secretary unprecedented authority to buy as much as $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.
Lawmakers demanded numerous changes to the Treasury Department's original three-page proposal, including limits on the how much company executives can be paid if their companies sell assets to the government. Congress also added an oversight board to supervise the program, raised the cap on bank deposits insured by the Federal Deposit Insurance Corp. to $250,000 from $100,000, and required steps to help homeowners avoid foreclosure.
Sweeteners added an estimated $150 billion in costs, including one 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.
To demonstrate their concern for "Main Street," the House approved a separate measure to extend unemployment benefits. That bill needs Senate approval.
The bailout vote divided members of the same party, and, in one case, a husband and wife.
Rep. Connie Mack, R-Fla., said the vote would go down in history as "the day Congress killed the free market." His wife, Rep. Mary Bono Mack, R-Palm Springs, voted for the bill.
Despite the political shift in favor of the bill, opponents remained steadfast. They included an odd-fellows coalition of liberals and conservatives.
"This is not a time for panic," said Rep. Devin Nunes, R-Fresno. "Why do we need to give $700 billion to one man to play hedge-fund god from the gilded offices of the United States Treasury?"
Rep. Paul Hodes, D-N.H., said that despite improvements, the bill focused "too much on Wall Street."
With lawmakers now heading home for the fall campaign, Congress will wait until next year to consider tougher regulations on financial institutions. Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee, said lawmakers next year will "do some serious surgery on the financial structure."
