Desperate to avoid another market-crushing defeat, House leaders won key converts Thursday to the $700 billion financial industry bailout on the eve of a make-or-break second vote.
President Bush and congressional leaders lobbied furiously for the dozen or so supporters they'd need to reverse Monday's stunning setback and approve a massive rescue plan designed to stave off national economic disaster.
Anything but reassured, investors sent the Dow Jones industrials plunging another 348 points, suggesting Wall Street is expecting tougher economic times even if the measure is rushed into law. The Federal Reserve reported record emergency lending to banks and investment firms, fresh evidence of the credit troubles squeezing the country.
“A lot of people are watching,” Bush pointed out – as if lawmakers needed reminding – and he argued from the White House that the huge rescue measure was the best chance to calm unnerved financial markets and ease the credit crunch. He was calling dozens of lawmakers, a spokesman said.
Democratic and Republican leaders worked over wayward colleagues wherever they could find them.
Rep. Steny Hoyer, the second-ranking House Democrat, said there was a “good prospect” of approving the measure but stopped short of predicting passage – or even promising a vote. Nonetheless, the vote was expected today. “I'm going to be pretty confident that we have sufficient votes to pass this before we put it on the floor,” Hoyer said.
The top Republican vote-counter, Rep. Roy Blunt of Missouri, did predict the measure would be approved.
Minds were changing in both parties in favor of the much-maligned measure, which would let the government spend billions of dollars to buy bad mortgage-related securities and other devalued assets from troubled financial institutions. If the plan works, advocates say, that would allow frozen credit to begin flowing again and prevent a serious recession.
Emboldened by the feverish bidding for votes, members of both parties were demanding substantial changes to the legislation before they would vote for it. A group of Republican opponents indicated they'd back it if the price tag were slashed to $250 billion and several special tax breaks added by the Senate – including for children's archery bow makers, imported rum producers and racetrack owners – were removed. Democrats wanted to add a way to pay for the bailout and more help for homeowners staring at foreclosure.
Speaker Nancy Pelosi, D-Calif., said no, such revisions were impossible because they would slow the measure's enactment and further shake markets.
“I don't think that any changes here will do what we need to do, which is right now to send a message of confidence to the markets that Congress will act,” she said.
The Senate breathed new life into the measure Wednesday after the stinging House defeat, voting 74-25 to approve the bailout, with additions designed to appeal to key constituencies. Business lobbyists were also inundating Capitol Hill in a rush to win over wavering lawmakers in both parties.
Beyond the Capitol, the drumbeat of bad economic news rattled on.
One government report said orders to factories plunged by the largest amount in nearly two years. Another said claims for jobless benefits hit a seven-year high. Investors appeared to be pulling money out of Wall Street and bracing for lengthy economic hard times.
Bush, meeting with business executives at the White House, said increasingly tight credit markets are not just hitting big banks in New York City but threatening the existence of small businesses across the country.