Senate, House pass financial rescue plan

WASHINGTON -- After one false start, Congress in the final week of its 2008 session passed the massive emergency rescue plan for the U.S. financial system.

The House at first defeated the $700 billion bill, but reconsidered at the end of the week after the Senate added $150 billion in popular tax breaks and other riders designed to build support.

Also, coalitions of lobbyists representing business big and small turned out in force to supplement pressure on lawmakers by the White House and congressional leaders.

A steep drop in the stock market following the first House vote also caught the attention of most members.

In the end, one of the final votes of the 110th session of Congress was likely the most significant as the rescue plan -- also known as the Wall Street bailout bill -- sought to stem the slide in financial markets that began with a breakdown among mortgage lenders but then spread widely through the credit economy.

The plan devised by Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke called for the government to buy up failed assets that were said to be clogging the books of financial institutions, in order to free up capital to grease the economy.

President Bush said passage was crucial to rescue a skidding financial system.

But critics challenged the wisdom of the government's deep involvement in the private sector, and worried that billions in taxpayer dollars were being put at risk to reward bad decisions made by super-wealthy Wall Street executives.

The final House vote was 263-171. Reps. Jon Porter, R-Nev., and Shelley Berkley D-Nev., voted for the bill. Rep. Dean Heller, R-Nev., voted against it.

Earlier, the Senate passed the bill 74-25. Sens. Harry Reid, D-Nev., and John Ensign, R-Nev., voted for it.

In the process of passing the bill, Senate leaders also added dozens of tax breaks to help solar, wind and other renewable energy technologies, and writeoffs for business investment, sales taxes and other popular deductions.

The Senate also added a provision long sought by mental health advocates that requires insurance companies to offer the same levels of coverage for treatment of mental illness and substance abuse as they do for physical ailments.

Earlier in the week, the bill went down to stunning defeat in the House, 228-205.

That version lacked support among conservatives who did not want the government to be strongly involved, and liberals who charged the Bush administration's solution would not do as much to help homeowners as it would investment brokers.

Porter voted for the initial version while Berkley and Heller voted against it.

INDIA NUKE BILL PASSED

Before adjournment, the Senate gave final approval to a landmark nuclear trade agreement with India. The vote was 86-13.

The deal would have the United States share nuclear technology with India, even though the country has refused to ban nuclear testing or sign the international non-proliferation treaty.

In exchange India would agree to subject a substantial part of its nuclear industry to international inspections. Nuclear weapons plants would not be covered.

The agreement was seen as a significant foreign policy achievement by the Bush administration in its final days, as it was said to forge closer ties between the United States and the giant democracy.

But critics said it could trigger a nuclear arms race in Asia.

Reid and Ensign voted for the bill.

Contact Stephens Washington Bureau Chief Steve Tetreault at stetreault @stephensmedia.com or 202-783-1760.