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BAILOUT CLEARS THE SENATE.
The Senate passed the Bailout Bill 74 to 25 tonight. Big margin. You can probably chalk it up to a couple things. Senators need more money than House members do, and represent larger constituencies, so they tend to be closer to business interests than are House members. Additionally, they're a bit further from immediate voter reprisal: Unlike the House, where everyone is up for reelection this year, only a third of the Senate is in campaign mode right now. They can afford to vote for a policy that might be unpopular in two months if they feel it will be a winner in two years (though only nine of the Senators who voted no are up for reelection, suggesting that that effect wasn't so powerful). And then there's the natural competition between the House and the Senate, where the latter likes to assume the role of big brother and show itself the more mature body. They were probably rather pleased to do what the House could not.
Meanwhile, the bill itself has some changes. The Federal Deposit Insurance Corporation will now insure bank accounts to $250,000, more than doubling the $100,000 limit which was set decades and decades ago. In a fairly cool provision which has a lot to do with the odd segmentation of jurisdiction, the bill now furthers the cause of mental health parity in insurance coverage. And there are a variety of tax breaks and giveaways and exemptions. As the New York Times dryly observes, "The changes in the bill were measurable by volume. The initial proposal from the Treasury Department ran just three pages; the latest version exceeds 450." Tomorrow it goes to the House for a vote, and folks expect it will pass. But then, they thought that last time, too.
COMMENTS (9)
fuck Harry Reid, Chris Dodd, Hillary Clinton and Barack Obama
fuck Ezra too
Posted by: because so many people have 250K in a savings account | October 2, 2008 4:44 AM
For the previous commenter--not a good idea to post comments to a blog when you just got home from a lengthy evening at the local watering hole. Take two aspirin in the morning--you are going to need them.
Posted by: PureGuesswork | October 2, 2008 6:09 AM
actually I was banging your mom
all night so I will be going for the benzylpenicillin
Posted by: she really likes anal | October 2, 2008 6:41 AM
The $100,000 "limit" was passed in 1991, for what it's worth. It's really a floor and not a limit, in any case. The FDIC has discretion to go above that amount, and often does. The entire point of the FDIC, after all, is to reduce the number of bank runs, and it's hard to do that if you're not covering the big depositors.
I wouldn't be surprised if this bill went to defeat in the House also. From what I hear, it's basically the same bill that failed, only with extra crap on it. Plus it's less than five weeks from the election, and the Dems still remember being burned by the Republicans on the last bailout bill.
Posted by: ploeg | October 2, 2008 7:28 AM
To the first commenter: not all deposits are held by individuals. For a middle market company, it is quite easy to go above $100,000 in deposits. They still have an incentive to pull deposits if there is a scare.
Ultimately, this bill needs to pass both houses and be implemented soon. It may not be perfect, but confidence needs to be restored to the financial system.
Posted by: JD | October 2, 2008 8:17 AM
From the NYT: "Moreover, the increase in federal deposit insurance will not be financed over the short term, as the insurance program now is, by assessing premiums on banks that benefit. Instead, banks will get an open-ended line of credit directly to the Treasury Department."
So it's no payment or interest until 2010. Wow, it's just like buying furniture!
Posted by: Bob Oso | October 2, 2008 11:26 AM
I imagine the primary reasons for the difference are the different attitude you referred to, and the incredibly negative reaction after the bill failed Monday.
House Republicans opposed it out of political cowardice (thinking the bailout unpopular). When the bill failed, and the DOW crashed 777 points, and the media reacted as a failure, then well, political cowardice suddenly says to vote for it.
Posted by: Shock Mouse | October 2, 2008 11:55 AM
Still waiting for an explanation from Ezra as to why exactly he thinks this bill is a good idea. What problem does it solve? What proof have we that this won't actually harm money markets and commercial lenders? How do we know this won't cause people to abandon commercial paper for treasury bills?
JD writes: Ultimately, this bill needs to pass both houses and be implemented soon. It may not be perfect, but confidence needs to be restored to the financial system.
How does it do that? By giving people confidence that the US taxpayer will be on the hook every time?
Posted by: Midwest Product | October 2, 2008 12:19 PM
Oh, and the fellow who wrote comments 1 and 3: didn't your mother teach you not to act out in public?
Posted by: Alec Mento | October 2, 2008 2:09 PM