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House Passes Rescue Plan

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Two days after Senate passage, the House passed on Friday, October 3, its version of the Emergency Economic Stabilization Act (EESA) of 2008 by a vote of 263-171. The bill now goes to President Bush, who is expected to sign it promptly. The House bill passed on the same day that Wells Fargo gained the inside track on acquiring Wachovia in a $15 billion stock swap. Wachovia was to be acquired by Citigroup, but that deal fell through.

The Senate package, passed on October 1 by a vote of 74-25, includes the financial-market rescue provisions that the House rejected September 29, plus an increase in FDIC insurance coverage to a maximum of $250,000. The Senate also extended numerous expiring business and energy tax provisions, kept the alternative minimum tax from increasing in 2009, and added disaster assistance.

Commenting on the successful passage of the bill, Treasury Secretary Henry Paulson said Treasury “will move rapidly to implement the new authorities, but we will also move methodically.” In the coming days, he said, “we will work with the Federal Reserve and the FDIC to develop strategies that deploy these tools in an expedited and methodical way to maximize effectiveness in strengthening the financial system, so it can continue to play its necessary and vital role supporting the U.S. economy and American jobs. Transparency throughout this process will be important, and I look forward to providing regular updates as we move ahead to implement this strategy.”

Several news reports, however, quoted analysts as saying that the bailout package would not stop the nation’s economy from slipping into a recession.