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The House of Representatives passed the $700 billion emergency economic stabilization bill and sent it to President George W. Bush who quickly signed it.
The bill is equipped with improvements added by the Senate in hopes of sweetening the deal for the wary congress. Many of their constituents had called for them to vote against the bill, but on the floor today representatives changed their minds about rejecting the bill on Monday saying that a yes vote was the “right thing to do.” Analysts worried that if the bill did not pass, credit markets would freeze up and inhibit banks from giving credit to small businesses and individuals.
While lawmakers voted, investor confidence improved and midday trading rose 1.47% to 153.80 despite reports from the Bureau of Labor Statistics stating that employment fell by 159,000 in September; the worse the country has experienced in five years. The unemployment rate remained unchanged at 6.1% but rose for blacks to 11.4% in September from 10.6% in August.
Earlier today, Sen. Barack Obama told an audience in Abington, Pa., that the policies Sen. John McCain and running mate Sarah Palin are promoting “are killing jobs in America every single day.”
“Obviously this is a very disappointing report. We’re dealing with a number of shocks to our economy and have been for some time — still elevated energy prices, the housing correction, and obviously the credit crisis that we’re dealing with now,” Tony Fratto, the White House deputy press secretary, said early this morning. “We think that one of the most important things we can do right now…is to pass this emergency legislation to deal with the problem in our credit markets.”
Added to the bill since Monday is an Alternative Minimum Tax patch, which will prevent the AMT from causing an increase in taxes for millions of middle class Americans.
Two other provisions also not included in Monday’s bill is a temporary increase in the Federal Deposit Insurance Corporation insurance limit to $250,000 until Dec. 31, 2009, and mark-to-market provisions which give the Security and Exchange Commission authority to suspend potentially abusive “naked” short selling in all equity securities.
Wednesday the SEC approved a 30-day extension to a temporary ban on short selling which was set to expire that day. Lawmakers and banks accuse the mark-to-market rule, which is instituted by the Financial Accounting Standard’s Board and the International Accounting Standards Board, of worsening the credit market crunch. The American Bankers Association had been putting pressure on the SEC and Congress to change the rule.
Banks say that mark-to-market evaluations do not allow brokers to give a fair value measurement of a company’s assets in a less liquid market, forcing them to sell below the value they believe the assets should be worth.
Also today, Wells Fargo Co. agreed to buy Wachovia Corp. in a $15.1 billion deal despite a prior FDIC-facilitated deal with Citigroup for $2.16 billion. Citigroup is demanding that Wachovia honor the original agreement. FDIC Chairman Sheila Bair said today her agency would stand behind the agreement it made with Citigroup.
“The FDIC will be reviewing all proposals and working with the primary regulators of all three institutions to pursue a resolution that serves the public interest,” said Bair.