***UPDATE*** 12:41AM 10/2
Bipartisanship: The Senate's bailout vote margin stood in stark contrast to the House's:
In stark contrast to the House rejection of the plan on Monday, a bipartisan coalition of senators -- including both presidential candidates -- showed no hesitation in backing a proposal that had drawn public scorn, though the outpouring eased somewhat after a market plunge followed the House defeat. The Senate margin was 74 to 25 in favor of the White House initiative to buy troubled securities in an effort to avoid an economic catastrophe.
***UPDATE*** 11:40PM
Bush Hails Senate Vote: The White House breathed a sigh of relief after the Senate passed a revised version of the bailout plan:
"I applaud the Senate for its strong bipartisan vote in favor of the financial rescue plan," the president said in a statement released by the White House following the 74-25 vote. "I especially appreciate the efforts of Majority Leader Harry Reid (of Nevada), Minority Leader Mitch McConnell (of Kentucky), Senators Chris Dodd (of Connecticut) and Judd Gregg (of New Hampshire), and the senior members of the relevant committees from both parties. They worked across the aisle to make vital improvements to the rescue package I sent Congress last month -- including an expansion of deposit insurance that will help protect the savings of American families and small businesses."
***UPDATE*** 11:03PM
Asian Markets Fall: Asian markets tumbled after the Senate approved the revised bailout package:
Asian markets and the U.S. dollar reversed earlier gains while safe haven bids such as U.S. Treasuries rose even after the U.S. Senate approved a $700 billion bailout plan of the financial system. Traders say the markets are nervous about what happens next in the House.
Japanese and South Korean stocks accelerated their losses after the approval, helping the MSCI index of Asia-Pacific stocks outside Japan dip down 0.7 percent, reversing a modest gain immediately before the U.S. Senate vote.
Dollar Advances: The dollar advanced against the euro, approaching a one-year high:
The dollar rose against the euro, approaching a one-year high, after the U.S. Senate approved a $700 billion bank-rescue bill to ease a global credit crisis.
The U.S. currency also gained on increased demand for dollar funding, reflecting the reluctance of banks to lend to each other amid a global credit crunch. The euro traded near a two-year low versus the yen on speculation European Central Bank President Jean-Claude Trichet will say the shortage of credit reduces the need for higher interest rates at a meeting today.
***UPDATE*** 10:29PM
The Roll Call: Click here to see how each senator voted.
***UPDATE*** 9:27PM Senate Passes Bailout Bill 74-25: The Senate has passed the bailout bill by an overwhelming margin:
After one spectacular failure, the $700 billion financial industry bailout found a second life Wednesday, winning lopsided passage in the Senate and gaining ground in the House, where Republicans opposition softened.Senators loaded the economic rescue bill with tax breaks and other sweeteners before passing it by a wide margin, 74-25, a month before the presidential and congressional elections.
In the House, leaders were working feverishly to convert enough opponents of the bill to push it through by Friday, just days after lawmakers there stunningly rejected an earlier version and sent markets plunging around the globe.
***UPDATE*** 8:42PM
Bailout Bill Grows Significantly In Length: The original bailout plan proposed by Treasure Secretary Hank Paulson was a scant 3 pages. It has now swelled to an astonishing 451 pages, and it's unclear if it will expand even more.
***UPDATE*** 6:07PM Obama Returns To Senate: Obama spoke on the Senate floor tonight, voicing his support for the bill as a "necessary but not sufficient step":
"I understand completely why people would be skeptical when President Bush called for a blank check to solve this problem," he said.
"There will be time to punish those who set this fire, but now is not the time to argue about how it got set or did the neighbor...leave the stove on," Obama said. "Right now we want to put out that fire..."
..."This will not solve all our problems," he said. "It is a necessary but not sufficient step."
McCain To Vote Yay: McCain signaled he will vote for the bailout:
Both encouraged Americans to back a Wall Street rescue because, as McCain said in Des Moines, Iowa, "Inaction is not an option." If the bailout passes the Senate, as expected, it would put more pressure on the House to follow suit when it meets again on Thursday.
The $700 billion financial industry bailout bill that failed in the House of Representatives was given something it apparently sorely needed: cover for skittish politicians. As a new version of the bill comes up for vote in the Senate tonight, it arrives with an increase in FDIC insurance from $100,000 to $250,000, as well as tax cuts, both aimed at smoothing over the bill with voters at home.
Tying the Wall Street bailout to a Main Street rescue might also help bridge the gap between defeat and passage in the House, considering the small margin in that vote Monday. The FDIC insurance increase draws a straight line from the financial institutions' failure to the average consumer.
FDIC and Treasury officials asked senators Tuesday night to include a provision in the revised financial-rescue bill that would increase the amount of money the FDIC could borrow from Treasury to $100 billion from $30 billion. But senators decided to take off the cap, authorizing the FDIC to request from the Treasury "a loan or loans in an amount or amounts necessary... without regard to limitations." The unlimited borrowing authority would last until the end of next year.
The legislation would also increase the government deposit-insurance ceiling for banks and credit unions to $250,000 from $100,000 for most depositors. This means the FDIC would be responsible for insuring a lot more money if more banks fail, which could put extreme pressure on its already low deposit-insurance fund. At the end of the second quarter, the FDIC had roughly $45 billion in its insurance fund to back close to $4.5 trillion in insured deposits.
CHECK THE WALL STREET CRISIS BIG NEWS PAGE FOR ONGOING COVERAGE
The added tax breaks targeted at businesses and the middle class, which the Associated Press totals at $100 billion, combined with disaster relief funds, could entice legislators from rural areas to vote for the Wall Street rescue bill. At the same time, fiscal conservatives may flee for the same reasons.
Warren Buffett continues to demonstrate his confidence in Congress to find a solution. After investing $5 billion in Goldman Sachs two weeks ago, the Berkshire Hathaway chairman today agreed to terms to invest $3 billion more in General Electric.
Additionally, the stock markets calmed down today after a serious dive on Monday and a sizable, though incomplete, rebound on Tuesday. Today's trading resulted in little net change after initial losses.
Optimistic About The BIll: The AP reports that Congressional leaders are optimistic the revised bill will clear both houses late this week, in large part due to the addition of tax breaks and a raise in the limit of federally insured deposits to $250,000:
The Senate pushed toward passage Wednesday of a $700 billion financial industry bailout, and opposition to the package among House Republican conservatives appeared to be softening as well, thanks partly to a provision to increase insurance for people's deposits.
Congressional leaders from both parties said they were hopeful that a new version of the rescue plan could be cleared late this week despite its stunning House defeat on Monday that sparked a historic stock sell-off. House Democratic leaders tentatively planned a Friday vote...
...The revised package to be voted on in the Senate also would add $100 billion in tax breaks for businesses and the middle class besides temporarily increasing the deposit insurance cap from the current $100,000 to $250,000. Meanwhile, the Securities and Exchange Commission has said it is easing the accounting rules in some cases.
The Senate's Bold Move: In an extraordinary power play, the leaders of the Senate are trying to "force the House's hand' by voting on this bill even though the House rejected it earlier. It is unclear how receptive the House will be to such a move, even Democrats:
The strategy is risky because some House members might see it as a high-handed move by senators. Senate passage of a bailout measure has seemed assured all along. The showdown is in the House, but now the Senate is trying to force the House's hand.
Sen. Charles Schumer, D-N.Y., called it "a brilliant move" that will "help pick up votes on both sides of the aisle."
House Speaker Nancy Pelosi's reaction was much cooler. "The Senate has made a decision about how to proceed and what can pass that body," the California Democrat said. "The Senate will vote tomorrow night, and the Congress will work its will."
The Candidates Return: Both Senator Obama and Senator McCain will fly back to Washington for the vote:
Democratic presidential nominee Barack Obama and his GOP rival, John McCain, planned to fly to Washington for the Senate vote, as did Democratic vice presidential nominee Joe Biden, adding to the political intrigue, and the White House continued to lobby hard, both publicly and privately.
The Holdouts: The bill that failed in the House on Monday would have passed had 12 congressmen had voted the other way. About 60 percent of House Republicans voted against the bill; Politico has a rundown of 12 House GOP members who voted against the bill and what it may take to change their minds:
Rep. Rodney Frelinghuysen (R-N.J.)
According to one senior GOP aide, Frelinghuysen was a yes but reversed his vote at the last minute. Afterward, Frelinghuysen called for more hearings and debate on the bill, saying, "We have not adequately consulted, deliberated and explained this to the American public and our constituents."
Rep. Jim Ramstad (R-Minn.)
A retiring moderate Republican, Ramstad could have voted for the bill without worrying about a voter backlash in November. But he complained that the rushed debate had left "the final cost to taxpayers ... uncertain" and said he would prefer an insurance plan to a bailout.
Rep. John B. Shadegg (R-Ariz.)
Although John McCain's campaign said he was working to rally House GOP support, not a single Republican from McCain's home state voted for the bill. Shadegg wants changes in mark-to-market accounting rules and an increase in Federal Deposit Insurance Corp. limits.
Read the full list of 12 here.
A Frantic Executive: The White House is lobbying furiously for the new bill's passage, and they're dire language has not softened at all:
White House spokesman Tony Fratto said the bill has been modified "in a way that we believe significantly improves the chances of ultimately being passed by both chambers and finding its way to the president's desk."
Mr. Fratto said conditions in the economy make the bill's passage crucial. "This morning we're seeing increased evidence of the credit squeeze on small businesses and municipalities all across the country, so it's critically important that we approve legislation this week and limit further damage to our economy," he said.