WASHINGTON - The House of Representatives approved the $700 billion Wall Street bailout yesterday, setting in motion the biggest government intervention in the financial system since the Great Depression as lawmakers anxiously awaited the economic and political impact.
President Bush quickly signed the bill, and Treasury Department officials vowed to move swiftly to use sweeping new powers to try to stabilize markets and ease deepening fears about the economy.
The vote took place amid fears that the financial turmoil was paralyzing sources of credit vital to businesses, governments and consumers. Underscoring that concern, California Gov. Arnold Schwarzenegger warned this week that that his state might need an emergency federal loan because of the crisis.
The House's 263-171 vote was a sharp reversal from Monday, when the chamber rejected a similar bill and the Dow Jones industrial average plunged 777 points.
Lawmakers from both parties described yesterday's vote, coming a month before they face re-election, as among the most wrenching of their careers.
"I may lose my race over this," said Rep. Sue Myrick, a North Carolina Republican who voted for the bill yesterday after opposing it earlier in the week. "But that's OK. Because I believe in my heart I'm doing the right thing."
Proponents sought to portray the measure as important to ordinary Americans even as some made clear their contempt for Wall Street's recklessness.
"Those greedy pigs on Wall Street don't deserve help from hard-working Americans," said Nebraska Republican Rep. Lee Terry, another vote convert. "But allowing them to fail will cause so many other businesses ... to lose access to credit, lose business."
Before Monday's vote, Congress had been deluged with calls and e-mails from constituents opposed to the bailout plan.
But Monday's stark market debacle was greeted by public outrage and led to four days of heavy lobbying for the proposal. Senate leaders added tax breaks and other sweeteners to the measure and passed it Wednesday. The bill won 58 new yes votes yesterday in the House, clinching passage.
"We have acted boldly to help prevent the crisis on Wall Street from becoming a crisis in communities across our country," Bush said.
Nonetheless, markets were down yesterday, reflecting broader economic uncertainty and worries about a government report showing that unemployment rose sharply in September.
The 451-page Emergency Economic Stabilization Act grants the Treasury secretary unprecedented authority to buy as much as $700 billion of troubled assets from ailing financial institutions in an effort to stave off more bankruptcies and provide cash for new loans to ease the credit market freeze.
Lawmakers demanded numerous changes to the original three-page proposal, including limits on how much company executives can be paid if their companies sell assets to the government.
Congress also added an oversight board to supervise the program, raised the cap on government bank deposit insurance to $250,000 from $100,000, and required steps to help homeowners avoid foreclosure.
Sweeteners added an estimated $150 billion in costs, including one provision that shields 24 million taxpayers from the Alternative Minimum Tax. The new law also has tax relief provisions for disaster victims; research and development tax credits; a hybrid-car tax credit; and tax breaks for teachers who spend their own money on school supplies.
Many House members said they were reluctant to help an unpopular financial sector and to approve new federal spending but felt they had no choice.
"Nobody in East Tennessee hates the fact more than me that I'm going to vote yes," said Rep. Zack Wamp, a Republican who came to favor the bill after helping defeat it in Monday's 228-205 vote. "Things are really bad, and we don't have any choice."
"I am just as angry and frustrated as many of those who have called my office," said Rep. Jerry McNerney, a California Democrat who voted yes both times. "But I voted for it because my constituents' 401(k)s, their life savings, and the ability to take out car, home and student loans hang in the balance."
Preparing for the political fallout, Georgia Republican Rep. Jim Marshall has begun airing a TV ad in his district in which he declares: "I don't like this rescue plan any more than you do. ... But I'm not going to stand by and let this crisis undermine our economy and damage the financial future of everyone in America."
In Monday's vote, Democrats voted 140-95 in favor; Republicans voted 133-65 against. Between the two votes, 33 Democrats switched their votes to yes, while one Democrat changed his vote from yes to no. Twenty-five Republicans switched to yes, and one other Republican voted yes yesterday after missing Monday's vote.
The presidential candidates - Democrat Barack Obama and Republican John McCain - took part in a broad-based effort to lobby lawmakers.
"I never talked to so many bank presidents in my life," said Rep. Joe Knollenberg, a Michigan Republican who converted yesterday to the yes camp. He also received a call from General Motors Chairman Rick Wagoner
The mood on the floor of the House chamber was markedly more relaxed yesterday than it had been Monday, reflecting expectations of passage.
House Speaker Nancy Pelosi of California, who on Monday riled Republicans by criticizing Bush's economic policies in a floor speech before the vote, softened her rhetoric yesterday.
Minority Leader John A. Boehner of Ohio, who denigrated the earlier version of the measure, urged Republicans to help pass it yesterday.
"Let's not kid ourselves: We're in the midst of a recession," Boehner said. "It's going to be a rough ride. But it will be a whole lot rougher ride if we don't pass this bill."
To demonstrate their concern for "Main Street," the House approved a separate measure to extend jobless benefits. That bill needs Senate approval.
Despite the political shift in favor of the bill, opponents remained steadfast. They included an odd-fellows coalition of liberals and conservatives.
"This is not a time for panic," said Rep. Devin Nunes, a California Republican. "Why do we need to give $700 billion to one man to play hedge-fund god from the gilded offices of the United States Treasury?"
With lawmakers now heading home for the fall campaign, Congress will wait until next year to consider tougher regulations on financial institutions. Rep. Barney Frank of Massachusetts, chairman of the House Financial Services Committee, said that next year lawmakers will "do some serious surgery on the financial structure."