Approved legislation makes $250 billion available now, up to $700 billion total in stages.
The House of Representatives, with a vote of 263 for and 171 against, passed an amended $700 billion bailout plan
aimed at rescuing Wall Street and preempting what some politicians predicted
would be financial disaster. The plan, which passed the Senate 74 to 25 on
Wednesday, included several changes, including relief for mortgage holders on
the brink, renewable energy credits and postpones the Alternative Minimum Tax
for a year.
Only $250 billion will be available immediately, with the remainder being
portioned out in stages. The bill allows the finance industry to sell troubled
assets, most of them mortgage-related, to the Treasury.
The amendments which proponents say helped sway undecided and opposition
voters also included a provision encouraging loan servicers to modify mortgages
to help homeowners avoid foreclosure, including reducing principal or interest
The bailout also requires the President to introduce a bill requiring
taxpayer reimbursement for any net losses from the program. It establishes two
checks and balances: a Financial Stability Board, which reports to a
Congressional oversight panel and raises depositor FDIC protection from
$100,000 to $250,000.
There are provisions for renewable energy credits for individuals and
businesses as well as credit for research and development for businesses and
credits that will allow individuals to deduct state and local taxes on their
Congressman Buck McKeon voted in favor of the plan, and he issued the following statement shortly thereafter;
“I joined my colleagues today in taking a bold step to
salvage the financial markets by passing the economic rescue package,” said McKeon.
“This bipartisan package includes substantial taxpayer protections and will
ultimately protect the savings accounts and money market accounts of millions
of American citizens. The bad actors on Wall Street will take a
significant loss with this legislation, but that loss will be contained and our
economy will be protected. Through this legislation, the federal
government lifts the current freeze on the credit market and allows that
capital to move back into the economy. I am also pleased this bill stands
against golden parachutes and giveaways for corporate executives and includes
$110 billion in tax relief, including a provision that will extend tax relief
to around 20 million middle-class Americans that would be inadvertently hit
with the onerous alternative minimum tax.”
Further illustrating the trickle-down trouble caused by the current chaos on
Wall Street, California
Governor Arnold Schwarzenegger sent
a letter Thursday to the Secretary of the Treasury asking for a $7 billion loan
from the federal government to cover state-funded services.
The governor’s actions came after the state was locked out of the credit market
for short-term financing for bond offerings and payments to schools, local
governments and law enforcement. It is expected that the state will issue $7
billion in Revenue Anticipation Notes – essentially government IOUs – for short
term cash flow purposes within a matter of days.
”The federal rescue package is not a bailout of Wall Street tycoons- it is a
lifeboat for millions of Americans whose life savings, businesses, retirement
plans and jobs are at stake,” he wrote to Secretary Paulson.
McKeon also weighed in on this issue;
“Without this package, Americans would have seen the
negative impact of a paralyzed financial market directly in their own lives,” McKeon
continued. “Governor Schwarzenegger made it clear this week that Congress
had to pass the rescue plan or California
would be forced to lay off state employees in order to stay afloat
financially. States and citizens across the nation are facing these same
dire circumstances. By passing the rescue plan, Congress is saving bank
accounts and jobs and saving the free market from crumbling.”