Passing the bailout plan by the Senate added pressure on the House to approve the plan that political and financial leaders called crucial to averting economic castastrophe. In the House, leaders were working feverishly to convert enough opponents of the bill to push it through by Friday, Sep 26, just days after lawmakers there stunningly rejected an earlier version and sent markets plunging around the globe.
The Bush administration's $700 billion bailout package, which was rejected by House of Representative on Monday, Sep 29, was modified after incorporating tax cuts and a higher limit for insured bank deposits. Along with proposed tax cuts for businesses, the modified bailout plan includes raising the federal deposit insurance levels to $250,000 from the current $100,000.
The proposal for increasing the deposit insurance limits had the backing of presidential candidates and many American law makers. The bailout package will prevent the more than 20 million middle class taxpayers from feeling the pinch of the alternative minimum tax.
After the bailout package was defeated in the House of Representatives, Bush administration and congressional leaders have been looking at ways to mollify dissenters, especially from the Republican fold.
With barely five weeks to go for the Nov 4 showdown, the bailout package was a major election issue and the White House hopefuls, Barack Obama and John McCain had called for the need to put aside partisan politics.
The Bush administration is frantically looking at ways in which the rude shocks of the last few days could be minimised, essentially making the point that continuing losses in Wall Street of close to trillion dollars or more can not be sustained by the economy.