Bailout Bill Passes

On October 3, 2008, the House of Representatives passed a bill, already amended by the Senate, that would authorize Treasury Secretary Henry Paulson to buy up to $700 million in bad debts from U.S. banks. The legislation passed the House by a vote of 263 to 171. The vote comes a week after the House rejected a similar bill, the Emergency Economic Stabilization Act, that also provided $700 billion for a Wall Street bailout, on the grounds that it did not include a cap on executive salaries and overburdened taxpayers.¹

Fast Facts

1. Creates "Troubled Asset Relief Program" (or TARP) to buy up "toxic assets"
2. Includes $110 billion in unrelated tax breaks²
3. Increases FDIC insurance cap from $100,000 to $250,000
4. Dow Jones Industrial Average plunged over 700 pts after first bill rejected
5. Legislation passed by Senate started life as a mental health bill sponsored by Pete Domenici and Paul Wellstone³

Quotes

• "By coming together on this legislation, we have acted boldly to help prevent the crisis on Wall Street from becoming a crisis in communities across our country." -- President George W. Bush⁴

• ""The broad authorities in this legislation, when combined with existing regulatory authorities and resources, gives us the ability to protect and recapitalize our financial system as we work through the stresses in our credit markets." -- Treasury Secretary Henry Paulson⁵

• "The American people will appreciate the leadership of their elected representatives and senators who took bold action to help stem a severe credit crunch that threatens to cost many jobs and undermine access to credit for working Americans." -- Ben Bernanke, Federal Reserve Chairman ⁶

• "I rise in strong opposition to this bill because it won't solve our problem...Instead of it being a credit crunch, I think it's a lot more serious than that. I think what's happening in the market today is signaling something much more draconian. It's probably telling us that our government is insolvent, that we're on the verge of bankruptcy and big things are starting to happen." -- Congressman Ron Paul⁷

• "While the focus has been on the Dow Jones and Wall Street, we are addressing the real pain felt by Mr. and Mrs. Jones on Main Street." -- House Speaker Nancy Pelosi⁸

Pork and "Incentives" in New Bill

According to the New York Post, a number of side measures and incentives were put into the bailout package before it was passed, including tax breaks for manufacturers of wooden arrows for children and Puerto Rican rum producers. The vote of Alaska Republican Don Young was also allegedly "purchased" by adding a provision that allows for tax benefits for those adversely affected by the Exxon Valdez Oil Spill.⁹

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Related Pages on Mahalo

Mortgage Bailout Plan | Bailout Bill Pork | Senate Bailout Vote | House Bailout Vote | President Bush Bailout Speech | Pelosi Bailout Speech | Bailout Bill Rejected | Bailout Bill Text | Subprime Mortgage Bailout

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