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House Approves Bailout For Financial Markets

Posted by Yogesh on Friday, 3 October, 2008

The House approved a revised $700 billion financial rescue package, ending a weeklong battle over a controversial measure after lawmakers came under pressure to head off a growing financial crisis.

Bailout Approved
CNBC.com
Bailout Approved

The plan, which was already approved by the Senate, would allow the government to spend billions of dollars to buy bad mortgage-related securities and other devalued assets from troubled financial institutions.

US stocks, which had rallied earlier on hopes of approval, began paring their gains after the measure was passed.

If it works, advocates say, that would allow frozen credit to begin flowing again and prevent a serious recession.

After the House rejected the initial measure on Monday, the Senate revised the bill, adding billions of dollars ot tax breaks to sweeten the package, and approved it Wednesday night.

In efforts to appease GOP opponents, the revised measure includes raising the limit on federal insurance for bank deposits from $100,000 to $250,000.

The bill also extends several tax breaks popular with businesses, provisions that are favorites for most Republicans.

It would keep the alternative minimum tax from hitting 20 million middle-income Americans, which appeals to lawmakers in both parties.

And it would provide $8 billion in tax relief for those hit by natural disasters in the Midwest, Texas and Louisiana.

A Republican member of the House Financial Services Committee told CNBC shortly before the vote that he believed there were enough votes in the House to pass the bill.

“We feel like we do” have enough ‘yes’ votes,” Rep. Adam Putnam of Florida said. “(House) Speaker (Nancy) Pelosi has said she will not bring the bill to the floor if it doesn’t appear they have the votes to pass it.”

He said both Democratic and Republican leaders had been talking to their members to line up the votes.

He said public comments had indicated a number of lawmakers who had voted against the bill on Monday had been persuaded to vote for it by new data or changes that had been made to the bill.

“I’m optimistic about today,” House Minority Leader John Boehner told reporters earlier. “We’re not going to take anything for granted. We’re going to continue to talk to our members. But it’s time to act on behalf of the American people. It’s about their savings. It’s about their jobs.”

Earlier, the US reported its biggest monthly job loss in 5 1/2 years, coming on top of a pile of economic data pointing to an approaching recession. Data showed the U.S. services sector holding up.

“The data has been horrible all week long. It absolutely does put pressure on them to get this rescue act passed,” said Fred Dickson, market strategist at D.A. Davidson in Lake Oswego, Oregon. “It’s a bill with risks, but it’s a plan and the market needs a plan.”

Source CNBC

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