Bailout Bill Passes in Senate

After a muscular 74-25 vote Wednesday in the U.S. Senate, a newly-strengthened financial rescue plan bill will return to the House of Representatives, which may take up the bill as early as Friday.

A cache of tax cut extensions – totaling $108 billion for businesses and families – sweeten the bill for Senators that were on the fence. The bill also contained language authorizing the Federal Deposit Insurance Corp. (FDIC) to increase the limit on bank accounts it insures to $250,000 from the current $100,000; that language was supported by both Presidential candidates during the week.

The American Bankers Association noted the FDIC language in a statement supporting the passage of the bill. "We are pleased that the Senate included our suggestion for a temporary increase in FDIC deposit insurance limits to $250,000 per account," the ABA said "This expansion is good for consumers, is paid for entirely by banks and will help Main Street without increasing costs for taxpayers. No one has ever lost even a penny of insured deposits."

The 25 “No” votes on the bill included 15 Republicans, nine Democrats and one independent. There was one missing vote from the roll call, that of Massachusetts Democrat Ted Kennedy who did not make the vote due to health issues.

The bill passed by the Senate Wednesday was actually a tax break extension bill that had been approved previously by the Senate but rebuffed by House leaders. So Senate leaders attached the bailout language to the tax bill, with modifications, and put it up for a vote. The hope is that it will entice enough Representatives in the House to gain passage.

The tax break extensions include a halt in the growth of the alternative minimum tax (AMT), the extension of federal deductions for sales taxes in states that do not levy an income tax, and tax breaks aimed at businesses including incentives for conducting research and development domestically and for opening new restaurants. New tax breaks in the bill include a property tax deduction of up to $1,000 for homeowners who do not currently itemize deductions and new tax breaks for renewable energy.

The House is scheduled to consider the bill on Friday.