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Bailout hopes rise as additional ‘no’ votes switch

WASHINGTON (AP) âÄî Desperate to avoid another market-crushing defeat, House leaders won key converts Thursday to the $700 billion financial industry bailout on the eve of a make-or-break second vote. President George W. Bush and congressional leaders lobbied furiously for the dozen or so supporters theyâÄôd need to reverse MondayâÄôs stunning setback and approve a massive rescue plan designed to stave off national economic disaster. Anything but reassured, investors sent the Dow Jones industrials plunging another 348 points, suggesting Wall Street is expecting tougher economic times even if the measure is rushed into law. The Federal Reserve reported record emergency lending to banks and investment firms, fresh evidence of the credit troubles squeezing the country. âÄúA lot of people are watching,âÄù Bush pointed out âÄî as if lawmakers needed reminding âÄî and he argued from the White House that the huge rescue measure was the best chance to calm unnerved financial markets and ease the credit crunch. He was calling dozens of lawmakers, a spokesman said. Democratic and Republican leaders worked over wayward colleagues wherever they could find them. Rep. Steny Hoyer, the second-ranking House Democrat, said there was a âÄúgood prospectâÄù of approving the measure but stopped short of predicting passage âÄî or even promising a vote. Nonetheless, the vote was expected on Friday. âÄúIâÄôm going to be pretty confident that we have sufficient votes to pass this before we put it on the floor,âÄù Hoyer said. The top Republican vote-counter, Rep. Roy Blunt of Missouri, did predict the measure would be approved. Minds were changing in both parties in favor of the much-maligned measure, which would let the government spend billions of dollars to buy bad mortgage-related securities and other devalued assets from troubled financial institutions. If the plan works, advocates say, that would allow frozen credit to begin flowing again and prevent a serious recession. GOP Rep. Ileana Ros-Lehtinen of Florida, said she was switching her âÄúnoâÄù vote to a âÄúyesâÄù after the Senate added some $110 million in tax breaks and other sweeteners before approving the measure Wednesday night. âÄúMonday what we had was a bailout for Wall Street firms and not much relief for taxpayers and hard-hit families. Now we have an economic rescue package,âÄù Ros-Lehtinen told The Associated Press. Rep. Zach Wamp of Tennessee, another of the 133 House Republicans who joined 95 Democrats Monday to reject the measure, also announced he was now onboard, even though âÄúI hate it.âÄù He told the AP, âÄúInaction to me is a greater danger to our country than this bill.âÄù Republican Rep. Jim Ramstad of Minnesota also switched to âÄúyes,âÄù partly because the Senate attached the bailout to legislation he spearheaded to give people with mental illnesses better health insurance coverage. Democratic Rep. Emanuel Cleaver of Missouri was switching, too, said spokesman Danny Rotert, declaring, âÄúAmerica feels differently today than it did on Monday about this bill.âÄù And Democratic Rep. Shelley Berkley of Nevada said she would back the bill after business leaders in her Las Vegas-area district made it clear how much it was needed. She said, âÄúThere isnâÄôt a segment of the population that hasnâÄôt been slammed and is not asking for some relief.âÄù Emboldened by the feverish bidding for votes, other members of both parties were demanding substantial changes to the legislation before they would vote for it. A group of Republican opponents indicated theyâÄôd back it if the price tag were slashed to $250 billion and several special tax breaks added by the Senate âÄî including for childrenâÄôs archery bow makers, imported rum producers and racetrack owners âÄîwere removed. Democrats wanted to add a way to pay for the bailout and more help for homeowners staring at foreclosure. Speaker Nancy Pelosi, D-Calif., said no, such revisions were impossible because they would slow the measureâÄôs enactment and further shake markets. âÄúI donâÄôt think that any changes here will do what we need to do, which is right now to send a message of confidence to the markets that Congress will act,âÄù she said. The Senate breathed new life into the measure Wednesday after the stinging House defeat, voting 74-25 to approve the bailout, with additions designed to appeal to key constituencies. Business lobbyists were also inundating Capitol Hill in a rush to win over wavering lawmakers in both parties. The changes helped satisfy some Republican critics, but angered conservative âÄúBlue DogâÄù Democrats who are concerned about swelling the deficit. Still, Hoyer predicted the number of Democratic defectors âÄúis going to be minimal.âÄù A handful of Republicans who voted for the measure Monday appeared to be backing away from it. âÄúWe can save ourselves from this rush to judgment,âÄù said Rep. Spencer Bachus of Alabama, the top Republican on the Financial Services Committee. He argued Congress should approve just a fraction of the money requested and then âÄúgo home and answer the wrath of our constituents.âÄù In efforts to appease GOP opponents, the Senate added a provision to raise, from $100,000 to $250,000, the limit on federal deposit insurance. House Republicans were also cheered by a decision by the Securities and Exchange Commission this week to ease rules that force companies to devalue assets on their balance sheets to reflect the price they can get on the market. The developments Wednesday prompted one Republican, Rep. John Shadegg of Arizona, to say he would support the new bill. Peter DeFazio, D-Ore., said he still opposed the bill despite Senate inclusion of a program that pays rural counties hurt by federal logging cutbacks. Beyond the Capitol, the drumbeat of bad economic news rattled on. One government report said orders to factories plunged by the largest amount in nearly two years. Another said claims for jobless benefits hit a seven-year high. Investors appeared to be pulling money out of Wall Street and bracing for lengthy economic hard times. Bush, meeting with business executives at the White House, said increasingly tight credit markets are not just hitting big banks in New York City but threatening the existence of small businesses across the country. The modified Senate bill would extend 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. Help for rural schools was aimed mainly at lawmakers in the West. Another addition, to extend the deductibility of state and local taxes for people in states without income taxes, helps Florida and Texas, among others. Ros-Lehtinen singled it out as one reason she changed her mind. Democratic leaders circulated data showing which states benefit most from an extension of a tax break for homeowners who do not itemize their tax returns. Texas, Florida, California and Pennsylvania ranked among the highest. The leaders hope the measure will bring support from black lawmakers, many of whom voted âÄúnoâÄù earlier this week, among others.

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