By Joseph Williams, Globe Staff
WASHINGTON -- US Senate leaders announced tonight that their chamber plans to vote on a Wall Street bailout package Wednesday evening.
It is expected to include the sweetener of raising the insurance limit on individual bank deposits from $100,000 to $250,000 to help small business owners and avert runs on banks by fearful customers. Earlier today, both John McCain and Barack Obama endorsed increasing the deposit guarantee after talking separately to the president from the campaign trail.
Obama's campaign announced tonight that he will return to Washington for the vote, and McCain's campaign did as well.
Several influential lawmakers -- including House Speaker Nancy Pelosi, a Democrat, and Representative John Boehner, the top Republican -- signalled their approval of the deposit insurance proposal as well, and the Federal Deposit Insurance Corp. said today it will seek permission to temporarily raise the limit. Aides to House Republicans said the FDIC proposal might draw some conservative Republicans who voted against the package on Monday.
Congressional leaders, alarmed by record losses in US financial markets and instability worldwide, worked publicly and behind the scenes today to resurrect President Bush's $700 billion bailout plan, pledging to set aside political differences and send a bill to the president's desk before the end of the week.
The salvage operation seemed especially difficult since an unusual alliance of conservative Republican and liberal Democrats helped defeat the bill in the House on Monday. But the ensuing plunge on Wall Street injected a new sense of urgency to solve the biggest financial crisis in generations.
Some lawmakers floated another proposal to persuade House opponents to reconsider -- a change to complex accounting rules that now require financial institutions to adjust the value of their assets to reflect current market prices, even if they plan to hold the assets for years. Some House Republicans say those rules undermined banks, forcing them to report huge paper losses on mortgage-backed securities and unnecessarily weakening confidence in them. (Federal regulators issued some bank-friendly clarifications to those rules today.)
McCain applauded that move. "John McCain is pleased to see that the SEC has finally decided to permit alternative accounting methods to mark-to-market accounting for securities where no active market exists. There is serious concern that these accounting rules are worsening the credit crunch, making it difficult for small businesses to stay afloat and squeezing family budgets. In March, John McCain called for a meeting of accounting professionals to discuss whether mark-to-market accounting was magnifying problems in the financial markets," his campaign said in a statement.
The flurry of activity on Capitol Hill spurred the Dow Jones industrial average to a nearly 500-point surge today, a rally that partly offset Monday's 778-point drop -- the biggest one-day loss in years. Analysts said while bargain hunters were scooping up stocks, the rise reflected investors' confidence that Congress will come to the rescue.
About Political Intelligence
Glen Johnson is Politics Editor at boston.com and lead blogger for "Political Intelligence." He moved to Massachusetts in the fourth grade, and has covered local, state, and national politics for over 25 years. E-mail him at firstname.lastname@example.org. Follow him on Twitter @globeglen.