Bush signs into law revised financial bailout bill
President George W. Bush signs the $700 billion US financial bailout bill in the Oval Office at the White House in Washington Friday. (Charles Dharapak/Associated Press)
U.S. President George W. Bush has signed into law an unprecedented $700 billion US plan aimed at easing the financial sector's credit crisis.
He added his signature shortly after the legislation was passed, 263-171, by the House of Representatives on Friday.
"We have acted boldly to help prevent the crisis on Wall Street from becoming a crisis in communities across our country," Bush said after the vote.
He warned that the U.S. economy, however, "continues to face serious challenges."
His sentiments were echoed by House members as they prepared to cast their vote Friday afternoon.
"Let's not kid ourselves: We're in the midst of the recession," said House minority leader John A. Boehner. "It's going to be a rough ride, but it will be a whole lot rougher ride" without the rescue plan.
The vote capped two weeks of upheaval in Congress, punctuated by daily warnings that the United States would be forced to confront its gravest economic crisis since the Great Depression if federal politicians failed to act.
A similar bill was rejected by the House on Monday, but support for the revised version had gained momentum over the past two days, leading up to the final debate and vote.
After the House rejected the previous package, stock markets around the world plummeted, before prices rebounded for a couple of days and fell sharply again on Thursday.
House Speaker Nancy Pelosi said members agreed on a number of compromises, changes she said would ensure the American taxpayer would profit.
Both Republicans and Democrats boasted that the bill will put limits on lucrative severance and retirement packages for corporate executives.
"The party is over. No longer will you drive your business into the ground, take a golden parachute to safety and have the taxpayer pick up the tab," Pelosi said.
There is speculation all the compromises could increase the cost of the bailout to $850 billion US.
Treasury Secretary Henry Paulson promised the government would move quickly to get bailout programs operating.
The plan will allow the U.S. government to 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 serious recession.
Increases deposit insuranceThe revised package also has a provision to raise the cap on federal deposit insurance from $100,000 to $250,000 per bank account and $110 billion in tax breaks for businesses and the middle class.
"I can only imagine what Milton Friedman would have to say about all this. It seems kind of un-American to do this sort of thing. I am just surprised that the market was artificially corrected."
—Shindy 77
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Bush said the plan will allow his government to purchase some troubled mortgage assets and create a new government insurance program that will guarantee the value of others.
The bill is expected to be a precursor to a larger Congress effort next year to overhaul housing policy and financial regulation, according to Financial Services Committee chairman Representative Barney Frank.
"We were the EMTs [emergency medical technicians] rushing to the rescue of an economy that suddenly found itself choking, but now we have to perform more serious reform," Frank said.
The plan's passage in the House, following strong Senate approval Wednesday night, was announced after the U.S. Labor Department said employers slashed 159,000 jobs in September, the largest cut in five years and further evidence of a sinking economy.
Bush said the bill includes tax incentives for businesses to invest and create jobs.
"I applaud the action taken by the Congress," said Federal Reserve Chairman Ben Bernanke. "The legislation is a critical step toward stabilizing our financial markets and ensuring an uninterrupted flow of credit to households and businesses."
A three-page request from the Bush administration to deploy $700 billion US as it saw fit in order to prop up ailing markets eventually grew into a more than 450-page document, as negotiators tacked on oversight measures and others sweeteners to secure support from Congress.
The measures include a process whereby Congress could vote to block half the $700 billion bailout, as well as measures to restrict "golden parachutes" for company executives who stood to benefit from the bailout.
A total of 33 Democrats and 25 Republicans switched from opposing to supporting the bill. In all, 91 Republicans joined 172 Democrats to support the measure while 108 Republicans and 63 Democrats voted "no."
Some supporters said the threat the financial crisis posed to the greater economy was more important than politics.
"I may lose this race over this vote, but that's okay with me," said Republican Representative Sue Myrick of North Carolina, who changed her vote to favor the measure. "This is the right vote for the country."
Others who voted against the bill weren't too convinced of its ability to stall what has been described as a looming crisis.
"Pray for our republic," said Representative Marcy Kaptur, a leading opponent of the measure. "She's being placed in very uncaring and greedy hands."
A decision by the Securities and Exchange Commission to ease accounting rules that require financial institutions to show the deflated value of assets on their balance sheets also reportedly helped secure support for the amended bill.
With files from the Associated Press
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