Lawmakers today discussed potential revisions in the Bush administrations $700 billion bailout bill for financial institutions, including an increase in the FDIC insurance limit for bank deposits and suspending mark-to-market accounting rules, in an effort to gain votes to pass the legislation this week.
A day after the House voted 228-205 to reject the legislation, sending the U.S. stock market into a nose dive, congressional leaders are trying to persuade a dozen members of Congress who voted against the measure to change their votes without alienating those who had voted for the bill.
One revision under discussion promoted by presidential candidates Sens. Barack Obama, D-Ill., and John McCain, R-Ariz. is raising the limit on the Federal Deposit Insurance Corp.s insurance on bank deposits to $250,000 from $100,000, according to a source close to the negotiations.
Another key revision, according to the source, would reduce amounts of the proposed $700 billion fund that the Treasury Department could access at any one time. The compromise bill defeated on Monday would have given Congress veto power over expenditures above $350 billion.
Yet another revision would suspend a mark-to-market accounting rule requirement that some argue is artificially depressing asset values on the balance sheets of financial institutions. (The SEC this afternoon issued guidance allowing company managers to use estimates to value securities for which there is no active market under existing mark-to-market accounting rule requirements.)
The core package (of the bailout bill) has to stay the same, said Scott Talbott, senior vice president of government affairs at the Financial Services Roundtable, Washington, a lobbying group for major financial institutions. Mr. Talbott has been lobbying for the legislative package. Now what were talking about is changes to bring along enough votes to get the bill through the House and the Senate.
President Bush this morning said administration officials were discussing ways to advance the legislation with congressional leaders. Our economy is depending on decisive action from the government, Mr. Bush said. The sooner we address the problem, the sooner we can get back on the path of growth and job creation. This is what elected leaders owe the American people, and I am confident that well deliver.
We are committed to keeping the progress of the rescue package moving forward, Senate Majority Leader Harry Reid, D-Nev., said on the Senate floor this morning.
We will get the job done; we will get it done this week, added Senate Republican Leader Mitch McConnell, R-Ky., in a statement.
Most institutional investors worldwide had backed the bailout bill that was rejected by the House, according to a Greenwich Associates survey issued late Monday. More than 60% of international institutional investors, large companies and pension funds around the world thought the legislation would have a good chance of restoring stability to financial markets if implemented, according to a news release.