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President Bush signs the Emergency Economic Stabilization Act of 2008 in the Oval Office on Friday. Charles Dharapak / The Associated Press

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Bush signs historic bailout bill

Friday, October 3, 2008 3:39 PM PDT

By Julie Hirschfeld Davis and David Espo
The Associated Press

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WASHINGTON — They held their noses and voted “yes.” Now lawmakers in both parties — along with President Bush — are waiting to see whether their historic $700 billion bailout for the financial industry can stabilize the tottering economy and prevent a broader meltdown.

“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.”

Reluctant Democrats and Republicans banded together Friday to approve the rescue plan — the broadest government intervention in markets in decades — on a 263-171 vote. Bush swiftly signed it.

Just a month before elections in which the sour economy is the dominant theme, Congress pushed the package through in a striking turnaround from the measure’s failure earlier in the week, which sent the stock market plummeting.

Friday’s vote capped an extraordinary 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.

And it was followed by somber reminders on Wall Street, where enthusiasm over the rescue gave way to worries about obstacles still facing the economy, sending the Dow Jones industrials dropping 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.

Scores of jittery lawmakers who opposed the measure Monday hopped aboard a revised version in the final vote, fearing a crushing economic contagion that was spreading to their constituents.

“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 A. Boehner, R-Ohio, the minority leader, as he prepared to cast his vote.

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.”

Rep. Barney Frank, D-Mass., the Financial Services Committee chairman, said the rescue bill was just the beginning of a much larger task Congress will tackle next year: overhauling housing policy and financial regulation in a legislative effort he compared to the New Deal.

“We were the EMTs rushing to the rescue of an economy that suddenly found itself choking, but now we have to perform more serious reform,” Frank said.

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.”

The reversal reflected a high-stakes political environment. Some lawmakers were worried about their own jobs, but others — mostly Democrats — focused on the prospect that a new president could have a far more significant effect on the economy than any one piece of legislation.

Several of the Democratic switchers were members of the Congressional Black Caucus who said they changed course after securing commitments from presidential candidate Barack Obama that he would back legislation to help struggling consumers and homeowners facing foreclosures if he wins the White House.

“It’s not too often you get the future president telling you that his priority matches your priority,” said Rep. Elijah Cummings, D-Md., one of 13 black lawmakers who switched from “no” to “yes.”

Republican presidential candidate John McCain also lobbied for the measure, according to aides who declined to say whom he called.

Rep. Roy Blunt, R-Mo., the party vote-counter, said McCain phoned Rep. John Shadegg, a fellow Arizonan who switched to

“yes.”

The legislation’s roller-coaster ride through Congress began at a somber meeting in Pelosi’s office in mid-September, where Paulson and Federal Reserve Chairman Ben Bernanke frightened senior Democrats and Republicans with their warnings of an impending economic collapse without quick legislative action.

As lawmakers scrambled to draft a bill, they were barraged by angry calls from constituents to reject what many saw as a huge giveaway to the very financial institutions that helped cause the subprime mortgage meltdown at the root of the economic crisis — with nothing to help its ordinary victims.

“Pray for our republic,” intoned Rep. Marcy Kaptur, D-Ohio, a leading opponent of the measure. “She’s being placed in very uncaring and greedy hands.”

Supporters said the prospect of economic disaster superseded their political fears.

“I may lose this race over this vote, but that’s OK with me,” said Republican Rep. Sue Myrick of North Carolina, who switched her vote to favor the measure. “This is the right vote for the country.”

After the breathtaking House defeat on Monday, Senate leaders took custody of the rescue, adding on $110 billion in tax breaks designed to attract additional support. They attached the overall measure to a popular bill mandating broader mental health coverage in the insurance industry.

The rescue measure was changed to lift, from $100,000 to $250,000, the cap on government bank deposit insurance — a key priority for Republicans. Also key to winning GOP support was 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.

The revised measure won Senate approval Wednesday night, 74-25, setting up a furious round of lobbying in the House as the administration, congressional leaders, the presidential candidates and outside groups joined forces behind the measure.

The maneuvers worked — augmented by a shift in public opinion that occurred after the stock market took its largest-ever one-day dive on Monday.

The plan — initially a three-page request from the Bush administration for unlimited power to use $700 billion any way it saw fit to stabilize markets — swelled to more than 450 pages as negotiators added restrictions for the administration and sweeteners for anxious members of Congress.

Lawmakers added greater supervision over the $700 billion — including a process where Congress could vote to block half the money — measures to protect taxpayers, and steps to crack down on “golden parachutes” for corporate executives whose companies benefit from the bailout.

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Kelso Guy wrote on Oct 3, 2008 1:03 PM:

" Socialism. "

rastor wrote on Oct 3, 2008 1:37 PM:

" Now you can buy arrows for children made in Oregon for less money...They no longer will be taxed by the Federal Government! "

CRFisherman wrote on Oct 3, 2008 1:50 PM:

" So if I can't pay my mortgage or credit cards or car payments, will GW take care of that for little 'ol me? When is enough enough? "

gimpy wrote on Oct 3, 2008 2:25 PM:

" Just wait until after the election, when this whole thing falls apart and they manage to blame the Democrats like they always do. "

Rural Citizen wrote on Oct 3, 2008 2:28 PM:

" Did you know we are under Martial Law? The Army is deployed (we saw them at Walmart today) across the nation in case we didn't like this bill and decided to make it known. "

skibowlruler wrote on Oct 3, 2008 2:43 PM:

" and how much does the war cost? "

TheGenius wrote on Oct 3, 2008 3:01 PM:

" Nothing more we can do about this one. Better hope everyone learned a lesson from this. Mainly, read the fine-print on all credit and mortgage apps. "

CRFisherman wrote on Oct 3, 2008 3:09 PM:

" It's a waste of money people....we are trying to help the very people that got the country into this mess. And when we have taken away the problems they created, the same people are still going to be in charge, finding new ways to make money. The world cannot grow exponentially every quarter....growth does have limits, investors need to realize this. It's pure greed that put us where we are today. "

pacnwmom wrote on Oct 3, 2008 3:13 PM:

" It would have helped the economy more if they just distributed that 700 Billion to the poor and middle class. (ok maybe not literally) but bailout is quite a bit bigger than the one GW gave to us earlier this year "

TDN Bad Boy wrote on Oct 3, 2008 3:17 PM:

" Well Gimpy I don't know who to blame and there probably is plenty of blame on both sides. I do know that a bill that began as 3 pages long and for less money is now a lot longer and costs a lot more thanks to a lot of special interest riders that were added like the one mentioned above. Both of the two Oregon Senators, one from each party, deny putting it in but somebody did. I tend to agree with Gimpy that this is not going to work. Sure know one thing, if Liberals win White House all of our taxes will be going up. There is no other way any of Obama's social spending programs can happen without heavy taxes. Or unless he sells out to Iran, which is a possibility. "

Lucky7 wrote on Oct 3, 2008 3:20 PM:

" This bill, as written SUCKS! I'd have rather let the economy die than sign this bill! We just took out a second, third, and fourth mortgage on our future great-great grandchildren's futures! "

DW wrote on Oct 3, 2008 3:22 PM:

" Welcome to the USAR, (United Socialist American Republic). What would the founders of this country say about us. I bet it would be something like, "We laid the foundation for a country that could be run by the people for the people, and it only took you fools 200 years to destroy it." "

local taxpayer wrote on Oct 3, 2008 3:38 PM:

" RE; Gimpy or you can wait untill it does work and the democrates take all the credit. They seem to be good at taking the credit for the good things done by the GOP. "

local taxpayer wrote on Oct 3, 2008 3:42 PM:

" And for all you that seem to think that this is such a Socialist Country and are so unhappy. Do the rest of us a favor and rent a U-Haul and move. Mexico is always accepting new citizens. "

American first wrote on Oct 3, 2008 3:47 PM:

" Your house gets broken into, your robbed, you and everybody knows exactly who did it, but rather then throw the robber in jail, his crimes against you are made legal... This is what just happened to most of us in middle America.
Please take the time to thank our communist freedom robbing elected Democrats like Brian baird and Nazi Polousey who control the house, and our Republican President Bush. All of them need replaced, they're all control freaks with socialist agendas and care less about what the people think! That goes for our Senators and Governor also, all of them are corrupt... God help us... "

TheGenius wrote on Oct 3, 2008 3:51 PM:

" Yeah, that'll be interesting. You know what? Now I want this to work. I want this succeed in ways we never dreamed possible. And years from, Pelosi or Reid can get on their soapbox and say it was all their doing and the Republicans have nothing to do with it. And everyone will realize the absurdity of that statement and they get voted out by the citizens in SF and Nevada. I can't wait to hear how Obama created this. Does anyone think he would suggest God gave him the bailout package on stone tablets? "

MOLE wrote on Oct 3, 2008 4:31 PM:

" 700 billion divided among all mortgage paying people, or even better every person 18 years of age how much would we all receive?? I will bet enough for us to pay of our debts[to the banks]house,cars,credit cards all paid off!!! NICE ,BUT NO THE FAT CATS GET OUR MONEY AND WE, STILL OWE THE DIRT BAGS MONEY.THIS IS UNFAIR DEMO OR REPUBLICAN,PAY MY WAY,BY THE PEOPLE FOR THE PEOPLE,WHAT A JOKE. LEGAL ROBBERY!! "

bmack wrote on Oct 3, 2008 5:55 PM:

" Why would someone run for a political office that pays one or two hundred thousand per year, and spend two or three million to get elected. I'm not talking about the president of the US but lesser offices. These guys are bought and paid for by special interest. They haven't represented us for a long time. Who do you think is going to go through hard times? The Wall Street investor, the politican, or Joe six pack. Wake up. "

roudy russ wrote on Oct 3, 2008 8:26 PM:

" According to the internet there are 222,189,963 adults (19 yrs or older) in the United States. Divide that by the bail out and you get a bill for $3150.45 per adult person. "

allaboutschools wrote on Oct 3, 2008 11:17 PM:

" Lesson to be learned is that you cannot build an empire based on sin. In this case they were deceiving borrowers. We are headed for learning that you can't depend on money which is derived from sin: Our casino and lottery boom is already starting to bounce back as in a bad way. We are straying way too far from the fundamentals which the nation built on (the Bible). "

kitten wrote on Oct 4, 2008 11:11 AM:

" People might want to wake up and smell the social state. Rural citizen is right. Why else would they put a ground fighting brigade on US soil for the first time in over a hundred years? It seems like they would be better used in Iraq or Afghanistan. As far as the bailout? Throw some more gas on the fire and see how well it works. The problem is NAFTA and no one even sees it. When's the last time you could buy something "Made in America"? It is a no-brainer. "

DW wrote on Oct 4, 2008 3:17 PM:

" Hey there local taxpayer, the problem with moving to mexico is that they have a very very very strict immigration law and if you break it, you go directly to jail, forefit all of your property, and if your lucky maybe get deported. Just a little different than our policy. Besides I would like to think that we can fix this mess, so I plan to stay here. And by the way do you think Socialism is a good thing? Socialism fails along with communism every time it is tried. I hope your not a socialist, but if you are maybe you could help out the cause and over pay your taxes to that others can pay less. Do you think you could do that for us....we would really appreciate it. "

mole wrote on Oct 4, 2008 3:55 PM:

" My refrences were taken off the internet from an e-mail called the "Birk Economic recovery Plan", the numbers they used were for the AIG bail out, and are as follows:

$85,000,000,000.00 bail out money
to make math simple they assume
200,000,000 bonafide citizens over 18
Our population is approx. 301,000,000 +/- counting every man woman & child.

So 200,000,000 divide $85,000,000,000.00
is $425,000.00 to each adult over 18. "

kalama river resident wrote on Oct 4, 2008 6:25 PM:

" Mole- You got suckered, Hope you don't believe everything you read? Use a calculator and do the math yourself. 85 billion divided by 200 million is only 425. Better forget about quiting your job!! "

mole wrote on Oct 4, 2008 9:28 PM:

" YOU FORGOT YOUR ZERO'S "

Rosey Glasses wrote on Oct 4, 2008 10:35 PM:

" kitten you are absolutely right. NAFTA was the beginning of the end. One of the problems is that many people you can't immigrate to the US do so to Canada, they get their CDLs and drive over the border. I have seen many drivers from canada who cannot obey the laws of the road, cut holes in their sleepers and do their business out the hole! The highway patrol inspectors won't even inspect those trucks, when in fact they should have hazmat come out and clean the truck, inspect them and then send them back to their terminal with notice not to return and a bill for the hazmat clean up. Another instance is where a truck out of mexico, the driver had his log in spanish, was over his 11 within 14 hours driving time, was shut down, and as soon as he threatened to call ACLU and fed government was allowed to leave the scale? What is wrong here is way over most heads. Our polititions are selling and giving our country away to those that would have her destroyed. Neither party is right, both are failing us and you all bicker about which party is right. Again I say... WAKE UP PEOPLE... quit taking the lessor of two evils. PROTEST.. we still have that right, and numbers. If this falls apart, all that will be left is our arms... I won't let them go. "

MOLE wrote on Oct 5, 2008 10:12 AM:

" what? kalama river resident,no nasty remarks?did you figure out your calculator does'nt have enough zeros!!!!get a math teacher to help you! "

kitten wrote on Oct 5, 2008 4:11 PM:

" Rosey, It is nice to see someone that finally gets it. I predict things are going to get scary soon! "

mole wrote on Oct 5, 2008 4:49 PM:

" "YOU GOTTA BE JOKIN" "

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