special arrangement with Informa Economics, Inc.
A renewed bipartisan effort underway to
get enough votes for passage
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In a stunning 205-228 vote, the House of Representatives
on Monday afternoon rejected the financial system rescue package pushed
by the Bush administration and congressional leaders from both political
parties. The House does not return until Thursday, but Capitol Hill leaders
and Bush administration officials said they will work on an alternative
approach to eventually receive enough votes for passage.
The vote count. House Democrats voted 140-95 for the
package, while the breakdown for House Republicans was 65-133, with
67 percent of Republicans voting against it. One Republican, Jerry Weller
of Illinois, did not vote.
A breakdown of the votes clearly showed lawmakers facing tight
congressional races voted against the bill – all of the
GOP freshmen members voted no, while nearly half of the Democratic freshmen
voted against the proposal. Far-right Republicans were joined by some
Blue Dog Democrats, and members from black and Latino districts, in
declining to support the measure.
House Minority Leader John Boehner (R-Ohio) said he tried repeatedly
and unsuccessfully to sway a handful of holdouts, but eventually gave
up. “You can’t break their arms, you can’t
put your whole relationship on the line with them and ask them to do
something they do not want to do and have that member regret that vote
for the rest of their life,” said Boehner, who added he could
not remember a time when the muscle of both parties and the White House
failed to produce a victory.
Some House Republicans blamed House Speaker
Nancy Pelosi (D-Calif.) for the bill’s failure, saying she had given
a partisan floor speech that caused many Republicans to
vote against the measure.
But Democrats mocked that charge, with Financial Services
Chairman Barney Frank (D-Mass.) saying, “I would not have imputed
that degree of pettiness and hypersensitivity,” to Republicans,
he said. “Somebody hurt my feelings so I will punish the country.
I mean, that’s hardly plausible.”
Pelosi pledged further bipartisan action in the near future.
“The crisis has not gone away. We must work in a bipartisan way
in order to have another bite at the apple in terms of some legislation,”
“We are ready to continue to work
on this,” said Frank. “As a practical matter,
the (new) initiative will probably come from the administration,”
While some House members signaled they
want the Senate to act on the coming revised bill first,
Senate Banking Chairman Chris Dodd (D-Conn.) said, “I think our
job in the Senate now is to let the House resolve its difficulties and
then let us know what the resolution is and whether or not we can live
with it,” he said.
As for interim measures, until
financial system rescue legislation is enacted, Treasury Secretary Paulson
said he and other federal regulators would continue using their existing
authorities to address problems in the financial sector.
“I and my colleagues at the Fed and the SEC continue to address
the market challenges we are facing on a daily basis,” Paulson
said. “Our toolkit is substantial, but insufficient. Therefore,
I will continue to work with congressional leaders to find a way forward
to pass a comprehensive plan to stabilize our financial system and protect
the American people by limiting the prospects of further deterioration
in our economy.” But Paulson added, “We need to put something
back together that works.”
Comments: While I was
also surprised about Monday's vote, our previous prediction that the issue
would eventually pass and be signed into law (“some way, some how”)
The way forward appears murky, and may be determined largely by
the response in the financial markets during the next few days.
Changes to woo enough House members are already being discussed.
GOP Conference Chairman Adam Putnam (R-Fla.) provided some of the possibilities
ahead when he said negotiators could tweak the existing proposal to
win more Republican votes. “There are issues out there that are
appealing to Republicans,” he said. “Doubling FDIC insurance,
things like [accounting] changes, are appealing to Republicans without
being revolting to Democrats.”
“We're going to stay here until we get this job done,”
said Senate Minority Leader Mitch McConnell (R-Ky.). “The
reaction from the market (on Monday) makes it clear that simply taking
no action at all is not acceptable.”
The House left town Monday for the Jewish holidays and will
not meet again until Thursday. In a statement Monday evening,
House Majority Leader Steny Hoyer (D-Md.) said that although the House
will be meeting on Thursday, “it has not been determined”
whether financial system rescue language will be considered. Some congressional
sources said it may take until Friday to reach a new consensus bill
that could garner enough votes for passage.
This column is copyrighted material, therefore reproduction or
retransmission is prohibited under U.S. copyright laws.