Everett, Wash.
Published: Saturday, October 4, 2008

$700 billion bailout deal is law

Congress passes the bill and Bush quickly signs it.

Associated Press

 WASHINGTON -- With the economy on the brink of a meltdown and elections looming, a reluctant Congress abruptly reversed course and approved a historic $700 billion government bailout of the battered financial industry on Friday. President Bush swiftly signed it.

The 263-171 House vote capped two weeks of tumult in Congress and on Wall Street, punctuated by urgent warnings from Bush that the country confronted the gravest economic disaster since the Great Depression if lawmakers failed to act.

"We have acted boldly to help prevent the crisis on Wall Street from becoming a crisis in communities across our country," Bush said shortly after the plan cleared Congress, although he conceded, "our economy continues to face serious challenges."

His somber warning was underscored on Wall Street, where enthusiasm over the rescue gave way to worries about obstacles still facing the economy, and the Dow Jones industrials dropped 157 points. The Labor Department said earlier in the day that employers had slashed 159,000 jobs in September, the largest cut in five years.

The vote was a striking turnaround from the measure's spectacular failure earlier in the week, which had triggered a massive stock sell-off and prompted nervous lawmakers -- fearing a crushing economic contagion that was spreading to their constituents -- to reconsider.

"Let's not kid ourselves: We're in the midst of a recession. It's going to be a rough ride, but it will be a whole lot rougher ride" without the rescue plan, said Rep. John Boehner, R-Ohio, the minority leader, as he prepared to cast his vote for the most sweeping federal intervention in markets in decades.

Treasury Secretary Henry Paulson pledged quick action to get the program up and operating.

The bailout, which gives the government broad authority to buy up toxic mortgage-related investments and other distressed assets from tottering financial institutions, is designed to ease a credit crunch that began on Wall Street but is engulfing businesses around the nation.

"In these past two weeks, we've seen things we never thought we would see before in terms of the economic insecurity of our own country," said House Speaker Nancy Pelosi, D-Calif. She said the measure would "begin to shape the financial stability of our country and the economic security of our people."

Just four days earlier, the previous version of the bill was sent down to defeat, largely at the hands of angry conservative Republicans. On Friday, a total of 33 Democrats and 25 Republicans switched from opposition to support. In all, 91 Republicans joined 172 Democrats to support the measure while 108 Republicans and 63 Democrats voted "no."
© 2009The Daily Herald Co., Everett, WA