Congress more likely to approve bailout package, politicians say

A leading House Democrat and his Republican counterpart voiced confidence Wednesday that headway is being made toward getting the much-criticized $700-billion financial industry bailout bill through Congress.

"I think the Senate thinks it has the votes and I think it probably will pass," said House majority leader Steny Hoyer, a Democratic Congressman from Maryland.

House Republican whip Roy Blunt of Missouri agreed that prospects for passage have improved. Blunt said he was particularly heartened by indications the legislation has become more appealing to constituents back home.

Wednesday vote

The plan was set for a Senate vote Wednesday night after leaders there agreed to add tax breaks for businesses and the middle class and increase deposit insurance in an attempt to revive the legislation rejected by the House.

The surprise move by Senate Democratic majority leader Harry Reid from Nevada and Republican minority leader Mitch McConnell from Kentucky appeared likely to win a big vote in the Senate that would put pressure on the House to go along and send the measure to the White House.

Tricky tax breaks

But Hoyer said on NBC's Today show that he was concerned that the tax issues could complicate the chances of final congressional passage when the legislation comes back to the House floor for a vote.

"There's no doubt the tax package is very controversial," he said, adding that "there's no doubt in my mind that the Senate added this because they thought that's the only way they could get it passed."

There were also concerns that conservative House Democrats known as "Blue Dogs" will be repulsed by the tax breaks, and could vote no because they have been saying they do not want to see the deficit soar even higher.

Blunt said one of the reasons he is more optimistic is that legislators are hearing less vocal opposition from their districts. Calls and e-mails to congressional offices that were running about 90 per cent against the measure earlier now are at about "50-50," he said.

"It should be before the House as quickly as it can," Blunt said on NBC. "But we should not set any artificial time limit here."

He said the rush to passage is one of the factors that doomed the bill, which was defeated 228-205 Monday, sending Wall Street into a nosedive with the biggest sell-off since the Sept. 11, 2001, trading period.

Both Blunt and Hoyer said they thought the atmosphere on Capitol Hill was more conducive to passage now, saying they believe an emerging consensus on raising the federal deposit insurance to $250,000 US has helped significantly.

Blunt also said he believes there's a better chance of getting the legislation enacted in the wake of a move to ease U.S. Securities and Exchange Commission accounting rules in a way that would give businesses more leeway in how they value their assets.

Those changes would be especially important as many troubled companies are carrying large amounts of distressed financial assets on their corporation statements related to asset-backed commercial paper and probably want to avoid large writedowns, a move which would chop the valuation of the firms in the stock markets.

"We have all indicated this crisis is not going to go away," Hoyer said, adding that Congress needs to move now to "stabilize our markets."