Alison Fitzgerald and Matthew Benjamin
Tuesday, Sept 30, 2008
The U.S. Senate will try to salvage a $700 billion financial-rescue package after the measure was defeated in the House of Representatives. The lawmakers won’t have a lot of room to negotiate.
While they need to tweak the legislation enough to win over reluctant Republicans, they’ll risk losing votes from Democrats if they veer too far from the delicate compromise that congressional leaders hammered out with the U.S. Treasury.
“They’re not going to totally revamp the bill,” said Pete Davis, president of Davis Capital Investment Ideas in Washington, who spoke to House and Senate leaders yesterday. “They’ll make some minor changes and pass it. This is all about political cover.”
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The House rejected the legislation yesterday in a 228 to 205 vote, sending the Dow Jones Industrial Average tumbling 778 points for its biggest point drop ever and erasing more than $1 trillion in market value. The Standard & Poor’s 500 Index fell 8.4 percent, the most since Oct. 26, 1987.
Senators say they have no choice but to revive the measure, which is designed to restore confidence in the nation’s banking system.
“We don’t intend to leave here without the job being done,” said Banking Committee Chairman Christopher Dodd, a Connecticut Democrat, who said the senators may deal with the bill as early as tomorrow.