The Senate is expected to pass legislation that would provide a multibillion-dollar bailout to financial institutions, forcing House leaders to try to cobble together a majority on the package that the lower chamber rejected Monday.
The Senate vote should be anticlimactic as both Majority Leader Harry Reid, D-Nev., and Minority Leader Mitch McConnell, R-Ky., have worked together to tweak the package after the House in a surprise vote rejected it by a 228-205 vote. GOP presidential nominee Sen. John McCain of Arizona and Democratic presidential nominee Sen. Barack Obama of Illinois, as well as Democratic vice presidential nominee Sen. Joseph Biden of Delaware, will show up to vote "yes." Senate Democratic and Republican aides expect about 75 senators to vote in favor of the bill.
The revised bill contains a Senate tax extender package and would raise FDIC coverage amounts from $100,000 to $250,000 for one year and give the agency an unlimited credit line from Treasury. Senate leaders are counting on the add-ons to help sway wavering House members, with special focus on moderate Democrats and Republicans to switch their votes.
Rep. Steven LaTourette, R-Ohio, said the Senate package was an improvement, as was an SEC announcement Tuesday that it would soon offer additional guidance on mark-to-market accounting rules. But he underscored he wants additional changes.
"We're getting closer. We're not quite there yet," said LaTourette, a key moderate who opposed the package on Monday. He said his opposition would grow if the Senate had a take-it-or-leave-it stance. "That would push me the wrong way," LaTourette said. Reid's press secretary, Jim Manley, said the Senate will be around at least one more day to wrap things up.
LaTourette said he is trying to get about a dozen moderate Republicans to sign onto a plan that would tweak the Senate package, which allows Treasury to purchase up to $700 billion in toxic mortgage assets to steady credit markets. On Monday's vote, 23 Republican Main Street Partnership members voted for the package; 21 were against it.
LaTourette's plan would allow Treasury to spend a limited amount, initially at most $250 billion, and then require Congress to grant an affirmative vote for the remaining funds. The Senate package only allows the final $350 billion to be stopped on a congressional vote of disapproval. LaTourette said he will try then to shop his plan to moderate Democrats to see if they have a sufficient block to change the bill.
Meanwhile, opposition to the Senate package appears unchanged with the Republican Study Committee. Seventy-four RSC members voted against the bill Monday and only 26 supported it. The group put out a letter noting that the tax extender portion of the bill contained new targeted earmarks for film and television production and development activity in Puerto Rico.
"The core remains the same. It's just different wrapping paper," said Rep. Michelle Bachmann, R-Minn. Bachmann is advocating a suspension of mark-to-market rules. The rules require companies to value assets at current prices, not their value when they mature. The issue is especially crucial in the real estate market, where many properties have been severely devalued but are expected to regain value.
For his part, President Bush has been calling senators Wednesday urging support for the new rescue package. "We think the modifications are helpful and will help to achieve passage in the House," said White House Deputy Press Secretary Tony Fratto. He noted that the tax extenders and the AMT fix have long been supported by the White House. "We think we can get this legislation across the finish line."
Ben Schneider and Larry Lipman contributed to this story.