Congressional leaders work to save $700 billion bailout bill - WDRB 41 Louisville News

Congressional leaders work to save $700 billion bailout bill

Congressional leaders, with advice from their parties' presidential nominees, scrambled Tuesday to find out what changes are needed to sell the failed $700 billion financial system bailout to rank-and-file members.

John McCain and Barack Obama offered long-distance help from the campaign trail. They announced separately that they support a plan that some House Republicans had pushed earlier: raising the federal deposit insurance limit from $100,000 to $250,000.

The aim of this change would be to reassure nervous Americans -- and hence their elected representatives at the Capitol -- that the legislation would shore up the faltering economy.

For his part, President Bush sought to avoid being marginalized. He spoke with both nominees, and made another statement in the White House. "Congress must act," he demanded in front of the cameras.

"I recognize this is a difficult vote for members of Congress," Bush said. "But the reality is we are in an urgent situation and the consequences will grow worse each day if we do not act."

Republican House aides said the FDIC proposal might attract some conservatives who want to help small business owners and avert runs on banks by customers fearful of losing their savings.

House Republican Leader John Boehner, R-Ohio, welcomed McCain's and Obama's embrace of a higher FDIC insurance cap, saying congressional Democrats had rejected it Saturday.

Another possible change to the bill would modify "mark to market" accounting rules. Such rules require banks and other financial institutions to adjust the value of their assets to reflect current market prices, even if they plan to hold the assets for years.

Some House Republicans say current rules forced banks to report huge paper losses on mortgage-backed securities, which might have been avoided.

Liberal Democrats who opposed the bill are suggesting other changes. The ideas include extending unemployment insurance and banning some forms of "short selling," in which investors bet that a stock's value will drop.

The White House signaled a willingness to accept some changes to the bill. Spokesman Tony Fratto said there are plenty of good ideas to help the financial markets and "we're going to look at all of those."

He would not comment on any specific proposal. He said the White House would want to see "if it will help the economy, it will help deal with this problem in our financial markets and the strength of our financial institutions, and if it will help in being able to pass legislation."

Senate Banking Committee Chairman Christopher Dodd, D-Conn., told reporters, "I'm told a number of people who voted 'no' yesterday are having serious second thoughts about it." He added, however, "there's no game plan that's been decided."

Senate Republican Leader Mitch McConnell of Kentucky said it was time for all lawmakers to "act like grown-ups, if you will, and get this done for all of the people." He predicted a bill would pass this week, although the House, not the Senate, is the focus of the dispute.

The House on Monday balked at approving the measure, pilloried in many quarters as a handout to big business. The 228-205 vote sparked the largest sell-off on Wall Street since shortly after the Sept. 11, 2001, terror attacks.

Stocks were trading higher Tuesday.

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