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The House's vote on the bill was hard earned. President Bush, Treasury Secretary Henry Paulson, both Presidential candidates, House members, and representatives from the financial services industry were working the phones all week trying to persuade lawmakers who opposed the bill on Monday to reconsider.
Despite statements from House Republican and Democratic leadership at the end of a long weekend of negotiations that a bipartisan deal had been reached, on Monday two-thirds of Republicans voted no.
On Wednesday, the Senate tried to back the House into a corner by passing a revised version with added measures including an increase in deposit insurance to $250,000 and a package of tax credits.
On Thursday Rep. Steven LaTourette, a House Financial Services Committee Republican from Ohio, who opposed the bill on Monday, sought an amendment that would strip some spending measures from the bill and limit Treasury's program to $250 billion. His amendment would have required Treasury to return to Congress for a lame duck session in November to seek Congressional approval for the rest of the money.
LaTourette said the inclusion of his amendment would attract more than enough votes to get the bill through the House. Though the Rules Committee prohibited his or any other amendments to be considered during debate Friday, observers said the attempt provided some members political cover to switch their votes by allowing them to point to efforts to curtail the bill's cost.
Rep. Judy Biggert, the top Republican on the Financial Services Committee's financial institutions subcommittee who voted no on Monday said during the debate Friday that market volatility, changes to the bill, regulatory commitments, and Republican attempts to limit its price tag helped persuade her to come on board.
"During the past two weeks, I've fought hard to present alternatives and add taxpayer protections to this bill We even attempted to limit the initial outlay to $250 billion so that Congress could come back in a month and reassess the need for the remainder of the $700 billion," said the Illinois lawmaker.
"This latest compromise is not the best package. It's the package that can move through Congress in time to protect the economy from lasting damage I reluctantly support the bill and look forward to revisiting the issue as Congress monitors the program to ensure that we minimize risks and that taxpayers see a return on this investment."
Friday's vote in the House found 32 more Democrats and 26 more Republicans to support the bill. On Monday, 65 Republicans and 140 Democrats voted yes.
Jaret Seiberg, an analyst from the Stanford Group, said more Democrats supported the bill after comments from Federal Deposit Insurance Corp. Chairman Sheila Bair praising a provision that would allow the government to provide credit guarantees and enhancements on whole loans.
Bair told IDD sister publication American Banker on Thursday that the provision could save the government money and speed loan modifications. House Financial Services Committee Chairman Barney Frank lauded her comments during debate on Friday. Seiberg said that had an impact.
"Sheila Bair's comments on how the legislation would permit Treasury to rework mortgages appears to have smoothed the way for enactment of this bill," he said. "It gave cover for liberal Democrats to jump on board. It was as important as any of the other efforts to bring Republicans on board."
Despite the bill's passage, members of both parties made clear that it was a tough action to support. Several called for radical reform of the financial services industry so that they do not find themselves in the same predicament down the road. Frank promised to seek such protections.
"We will do some serious surgery on the financial structure, but at this point we have the EMT function," said the Massachusetts Democrat. "We have an emergency and we have to avert serious harm. This is step one, step two will be the serious work we will do to prevent this from reoccurring."
