Bush Aims to Bolster Support As Senate Set to Vote on Rescue

U.S. President George W. Bush will be speaking with lawmakers to bolster the backing for the Senate's $700 billion market-rescue bill, a package the White House says is increasingly needed as credit conditions tighten throughout the U.S.

Bush: Financial Security Is at Stake

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President Bush argues the need for quick congressional action on a rescue plan. If action is not taken, he says, the "economic damage will be painful and lasting." Video courtesy of Fox News. (Sept. 30)

The Senate is set to vote Wednesday evening on a modified version of the $700 billion emergency markets rescue bill, which would boost federal deposit insurance limits and include several tax breaks, a senior Senate Democratic aide said Tuesday. The vote most likely will come after 7:30 p.m. EDT, according to an aide in Senate Majority Leader Harry Reid's office. The vote is being held after sunset in observance of the Jewish holiday Rosh Hashanah.

"We appreciate the work by Senators Reid and McConnell to modify the bill and bring it to the floor for a vote tonight," White House spokesman Tony Fratto said Wednesday, referring to Harry Reid (D., Nev.) and Mitch McConnell (R., Ky.). "We look forward to the debate, and hope to see strong support."

Mr. Fratto said conditions in the economy make the bill's passage crucial. "This morning we're seeing increased evidence of the credit squeeze on small businesses and municipalities all across the country, so it's critically important that we approve legislation this week and limit further damage to our economy," he said.

The bill would raise the Federal Deposit Insurance Corp. insurance limit on most bank accounts to $250,000, up from the current $100,000 cap. The bill also is likely to include the Senate version of an extension to a series of renewable energy and other business tax credits as well as an extension of a fix for the alternative minimum tax.

The move to boost deposit-insurance limits, which the White House has raised with industry players, received a boost Tuesday when presidential candidates Sens. John McCain and Barack Obama endorsed the idea. Both candidates planned to return to Washington Wednesday for the possible Senate vote. Sheila Bair, chairwoman of the Federal Deposit Insurance Corp., which oversees the program, said she would support temporarily raising the coverage.

Congressional leaders were also considering changing an accounting rule known as "mark to market" that some lawmakers blame for the financial system's volatility. The legislation would back up the Securities and Exchange Commission, which Tuesday gave companies more leeway to figure out the value of assets for which there are no buyers. Other possible additions: jobless benefits and homeowner tax breaks.

The Senate vote would come after the U.S. House shocked Wall Street and Washington Monday by voting 228-205 to defeat the bailout legislation, a move that sent the Dow Jones Industrial Average tumbling more than 700 points.

"I'm willing to do this given the exigencies we're looking at," said Sen. Christopher Dodd, a Connecticut Democrat and chairman of the Senate Banking Committee. "This is a matter I normally want to give a lot more consideration to than 24 hours." Mr. Dodd said the Senate would vote on raising the FDIC limit to $250,000 from $100,000 for one year. Final details were still being worked out and could change.

These seemingly minor moves are part of an effort by White House and congressional leaders to rescue the president's proposal by giving it a running start in the Senate. Mr. Bush has said the plan is vital to ensure the proper functioning of the financial system. The proposal was defeated Monday in a stunning revolt by rank-and-file lawmakers, sending global stock markets reeling.

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A stockbroker looked at her screen in Frankfurt.

It's not clear if the measures will be enough to reverse Monday's defeat, although initial indications suggest they will attract lawmakers to the legislation. The moves wouldn't fundamentally change Treasury's proposal to buy troubled assets, but would add a populist tinge at a time when voters appear enraged at what many see as a bailout of Wall Street, not Main Street.

Federal law generally insures depositors up to $100,000 when banks fail. The limit hasn't been increased in more than two decades. Proponents of raising the limit say runs on deposits, fueled by consumer fears about the economy, have contributed to recent financial turmoil, and played a part in the collapse of IndyMac and Washington Mutual Inc. They say higher limits will restore confidence in the banking system by comforting consumers who might otherwise take their money out.

Congressional aides said a new proposal could build support among centrist Democrats and Republicans by addressing concerns that the Bush-backed bill needs more protections for Main Street.

Such a measure would also win the backing of community bankers, who have lobbied heavily on its behalf. The U.S. government recently began insuring money-market mutual funds temporarily. Bankers argue that takes away one of their advantages over those funds, which offer better yields than bank deposit accounts. The community banking industry is a powerful force behind the scenes in Congress and its clout could sway some lawmakers to support the bill.

Adding to the pressure on Congress to act were some of the nation's biggest corporations, including Verizon Communications Inc., Microsoft Corp. and General Electric Co. GE Chief Executive Jeffrey Immelt is actively lobbying politicians and finance officials in Washington to complete the financial-rescue bill, said a company spokesman. To back up his message, Mr. Immelt directed his staff to compile evidence of the "negative ripple effects" throughout America from the crisis on Wall Street, including information on what is happening to customers and employees in all 50 states.