Historic bailout bill passes Congress; President Bush signs

10:15 p.m.

By JULIE HIRSCHFELD DAVIS
Associated Press Writer

WASHINGTON (AP) - They held their noses and voted "yes."
Now lawmakers in both parties - along with President Bush - are waiting to see whether their historic $700 billion bailout for the financial industry can stabilize the tottering economy and prevent a broader meltdown.
"We have acted boldly to help prevent the crisis on Wall Street from becoming a crisis in communities across our country," Bush said shortly after the plan cleared Congress, although he conceded, "our economy continues to face serious challenges."
Reluctant Democrats and Republicans banded together Friday to approve the rescue plan - the broadest government intervention in markets in decades - on a 263-171 vote in the House. Bush swiftly signed it.
Just a month before elections in which the sour economy is the dominant theme, Congress pushed the package through in a striking turnaround from the measure's failure earlier in the week, which sent the stock market plummeting.
Friday's vote capped an extraordinary two weeks of tumult in Congress and on Wall Street, punctuated by urgent warnings from Bush that the country confronted the gravest economic disaster since the Great Depression if lawmakers failed to act.
And it was followed by somber reminders on Wall Street, where enthusiasm over the rescue gave way to worries about obstacles still facing the economy, sending the Dow Jones industrials dropping 157 points. The Labor Department said earlier in the day that employers had slashed 159,000 jobs in September, the largest cut in five years.
Scores of jittery lawmakers who opposed the measure Monday hopped aboard a revised version in the final vote, fearing a crushing economic contagion that was spreading to their constituents.
"Let's not kid ourselves: We're in the midst of a recession. It's going to be a rough ride, but it will be a whole lot rougher ride" without the rescue plan, said Rep. John A. Boehner, R-Ohio, the minority leader, as he prepared to cast his vote.
Treasury Secretary Henry Paulson pledged quick action to get the program up and operating.
The bailout, which gives the government broad authority to buy up toxic mortgage-related investments and other distressed assets from tottering financial institutions, is designed to ease a credit crunch that began on Wall Street but is engulfing businesses around the nation.
"In these past two weeks, we've seen things we never thought we would see before in terms of the economic insecurity of our own country," said House Speaker Nancy Pelosi, D-Calif. She said the measure would "begin to shape the financial stability of our country and the economic security of our people."
Rep. Barney Frank, D-Mass., the Financial Services Committee chairman, said the rescue bill was just the beginning of a much larger task Congress will tackle next year: overhauling housing policy and financial regulation in a legislative effort he compared to the New Deal.
"We were the EMTs rushing to the rescue of an economy that suddenly found itself choking, but now we have to perform more serious reform," Frank said.
Just four days earlier, the previous version of the bill was sent down to defeat, largely at the hands of angry conservative Republicans. On Friday, a total of 33 Democrats and 25 Republicans switched from opposition to support. In all, 91 Republicans joined 172 Democrats to support the measure while 108 Republicans and 63 Democrats voted "no."
The reversal reflected a high-stakes political environment. Some lawmakers were worried about their own jobs, but others - mostly Democrats - focused on the prospect that a new president could have a far more significant effect on the economy than any one piece of legislation.
Several of the Democratic switchers were members of the Congressional Black Caucus who said they changed course after securing commitments from presidential candidate Barack Obama that he would back legislation to help struggling consumers and homeowners facing foreclosures if he wins the White House.
"It's not too often you get the future president telling you that his priority matches your priority," said Rep. Elijah Cummings, D-Md., one of 13 black lawmakers who switched from "no" to "yes."
Republican presidential candidate John McCain also lobbied for the measure, according to aides who declined to say whom he called.
Rep. Roy Blunt, R-Mo., the party vote-counter, said McCain phoned Rep. John Shadegg, a fellow Arizonan who switched to "yes."
The legislation's roller-coaster ride through Congress began at a somber meeting in Pelosi's office in mid-September where Paulson and Federal Reserve Chairman Ben Bernanke frightened senior Democrats and Republicans with their warnings of an impending economic collapse without quick legislative action.
As lawmakers scrambled to draft a bill, they were barraged by angry calls from constituents to reject what many saw as a huge giveaway to the very financial institutions that helped cause the subprime mortgage meltdown at the root of the economic crisis - with nothing to help its ordinary victims.
"Pray for our republic," intoned Rep. Marcy Kaptur, D-Ohio, a leading opponent of the measure. "She's being placed in very uncaring and greedy hands."
Supporters said the prospect of economic disaster superseded their political fears.
"I may lose this race over this vote, but that's OK with me," said Republican Rep. Sue Myrick of North Carolina, who switched her vote to favor the measure. "This is the right vote for the country."
After the breathtaking House defeat on Monday, Senate leaders took custody of the rescue, adding on $110 billion in tax breaks designed to attract additional support. They attached the overall measure to a popular bill mandating broader mental health coverage in the insurance industry.
The rescue measure was changed to lift, from $100,000 to $250,000, the cap on government bank deposit insurance - a key priority for Republicans. Also key to winning GOP support was a decision by the Securities and Exchange Commission to ease accounting rules that require financial institutions to show the deflated value of assets on their balance sheets.
The revised measure won Senate approval Wednesday night, 74-25, setting up a furious round of lobbying in the House as the administration, congressional leaders, the presidential candidates and outside groups joined forces behind the measure.
The maneuvers worked - augmented by a shift in public opinion that occurred after the stock market took its largest-ever one-day dive on Monday.
The plan - initially a three-page request from the Bush administration for unlimited power to use $700 billion any way it saw fit to stabilize markets - swelled to more than 450 pages as negotiators added restrictions for the administration and sweeteners for anxious members of Congress.
Lawmakers added greater supervision over the $700 billion - including a process in which Congress could vote to block half the money - measures to protect taxpayers and crack down on golden parachutes for corporate executives whose companies benefit from the bailout.

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4:03 p.m.

By TOM RAUM
Associated Press Writer

WASHINGTON (AP) - President Bush quickly signed into law a far-reaching $700 billion bill to bail out the nation's tottering financial industry, calling it "essential to helping America's economy" weather the storm.
The president signed the bill Friday about an hour and a half after the House completed congressional action on it with a 263-171 vote, underscoring the sense of urgency surrounding the measure.
"I know some Americans have concerns about this legislation, especially about the government's role and the bill's cost," Bush said in remarks in the Rose Garden.
"As a strong supporter of free enterprise, I believe government intervention should occur only when necessary. In this situation, action is clearly necessary."
The measure, which passed the Senate on Wednesday, authorizes the government to buy - and later try to resell - bad mortgages and securities backed by them from banks and other financial institutions around the country.
Bush said the action should allow banks to begin lending again once they get the tainted assets off their books.
"By coming together on this legislation, we have acted boldly to help prevent the crisis on Wall Street from becoming a crisis in communities across our country," Bush said. "We have shown the world that the United States of America will stabilize our financial markets and maintain a leading role in the global economy."
"Ultimately, the cost to taxpayers will be far less than the initial outlay," Bush said.
After his remarks, Bush walked the short distance to the Treasury Department where he was greeted by Treasury Secretary Henry Paulson, who helped steer the complicated legislation through Congress and who will oversee the program for the remainder of the Bush administration.
Paulson was asked by a reporter how he was feeling after a harrowing week. "Better," he said.
When the two emerged about 25 minutes later, Bush told Paulson, "You and your team have worked incredibly hard."
"I know that your people are exhausted in there," he said.
Bush signed the bill at his desk in the Oval Office. Photographers were invited in to capture the moment.
An earlier version of the rescue plan was rejected in the House on Monday, sending stock markets plunging around the world and raising fears that the U.S. was headed for the worst economic crisis since the 1930s.
But the bill was sweetened with tax cuts and an increase in the government insurance on deposits and savings accounts, to $250,000, as leaders of both parties stepped up their efforts to corral support.
"A major problem in our financial system is that banks have restricted the flow of credit to businesses and consumers. Many of the assets these banks are holding have lost value," Bush said.
He said the legislation that is now law "addresses this problem head-on by providing a variety of new tools to the government, such as allowing us to purchase some of the troubled assets and creating a new government insurance program that will guarantee the value of others."
"Taken together, these steps represent decisive action to ease the credit crunch that is now threatening our economy," he added.
He said that if the plan works as intended, once housing prices stabilize, the government should be able to resell the troubled assets - possibly at a profit. "And over time, Americans should expect that much, if not all, of the tax dollars we invest will be paid back."
He cautioned that "it will take some time for this legislation to have its full impact on our economy."
In the last major government intervention in financial markets, the government in the late 1980s took over assets of more than a thousand savings and loan associations that had gone broke. That cleanup took six years.

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1:48 p.m.

By JULIE HIRSCHFELD DAVIS and DAVID ESPO
Associated Press Writers

WASHINGTON (AP) - With the economy on the brink and elections looming, Congress approved an unprecedented $700 billion government bailout of the battered financial industry on Friday and sent it to President Bush for his certain signature.
The final vote, 263-171 in the House, a comfortable margin that was 58 more votes than it garnered on Monday. The vote capped two weeks of tumult in Congress and on Wall Street, punctuated by daily warnings that the country confronted the gravest economic crisis since the Great Depression if lawmakers failed to act.
Bush was poised to make a statement on the historic vote.
"We all know that we are in the midst of a financial crisis," House Republican Leader John Boehner of Ohio, said shortly before casting his vote for government intervention in private capital markets that was unthinkable only a month ago.
"And we know that if we do nothing, this crisis is likely to worsen and to put us into an economic slump like most of us have never seen."
Speaker Nancy Pelosi, D-Calif., said the bill was needed to "Begin to shape the financial stability of our country and the economic security of our people."
Stocks were up on Wall Street, where there was a lot of anticipation of the vote but where investors also were buffeted by a bad report on the job market. The Labor Department said employers slashed 159,000 jobs in September, the largest cut in five years and further evidence of a sinking economy.
Even before the measure cleared Congress, the White House sought to dampen optimism of its immediate impact on the economy. "This legislation is to fix a problem in our financial markets," said spokesman Tony Fratto. "It's not sold as giving a boost to the economy, but rather preventing a crisis in our economy... If it works as we hope it will, credit will be able to begin flowing again."
The House vote marked a sharp change from Monday, when an earlier measure was sent down to defeat, largely at the hands of angry conservative Republicans.
Senate leaders quickly took custody of the measure, adding on $110 billion in tax and spending provisions designed to attract additional support, then grafting on legislation mandating broader mental health coverage in the insurance industry. The revised measure won Senate approval Wednesday night, 74-25, setting up a furious round of lobbying in the House as the administration, congressional leaders, the major party presidential candidates and outside groups joined forces behind the measure.
It worked - augmented by a sudden switch in public opinion that occurred after the stock market took its largest-ever one-day dive on Monday.
"No matter what we do or what we pass, there are still tough times out there. People are mad - I'm mad," said Republican Rep. J. Gresham Barrett of South Carolina, who opposed the measure the first time it came to a vote. Now, he said, "We have to act. We have to act now."
Rep. John Lewis, D-Ga., another convert, said, "I have decided that the cost of doing nothing is greater than the cost of doing something."
Critics were unrelenting.
"How can we have capitalism on the way up and socialism on the way down," said Rep. Jeb Hensarling of Texas, a leader among conservative Republicans who oppose the central thrust of the legislation - an unprecedented federal intervention into the private capital markets.
It was little more than two weeks ago that Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke concluded that the economy was in such danger that a massive government intervention in the private markets was essential.
The core of the plan remains little changed from its inception - the Treasury Department would have $700 billion at its disposal to purchase bad mortage-related securities that are weighing down the balance sheets of institutions that hold them. The flow of credit has slowed, in some cases drying up, threatening the ability of businesses to conduct routine operations or expand.
At the same time, lawmakers have dramatically changed the measure, insisting on greater congressional supervision over the $700 billion, taking measures to protect taxpayers, and insisting on steps to crack down on so-called "golden parachutes" that go to corporate executives whose companies fail.
Earlier in the week, the legislation was altered to expand the federal insurance program for individual bank deposits, and the Securities and Exchange Commission took steps to ease the impact of the questionable mortgage-backed securities on financial institutions.
In the moments before the vote, Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee, pledged "serious surgery" next year to address the underlying causes of the crisis.
If anything, the economic news added to the sense of urgency.
The Labor Department said initial claims for jobless benefits had increased last week to the highest level since the gloomy days after the 2001 terror attacks. The news of the payroll cuts came on top of Thursday's Commerce Department report that factory orders in August plunged by 4 percent.
Typifying arguments the problem no longer is just a Wall Street issue but also one for Main Street, lawmakers from California and Florida said their state governments were beginning to experience trouble borrowing funds for their own operations.
Pelosi said, "We must win it for Mr. and Mrs. Jones on Main Street."
One month before election day, the drama unfolded in an intensely political atmosphere.
Democratic presidential candidate Barack Obama, a supporter of the bill, made calls to members of the Congressional Black Caucus, who publicly credited him with changing their minds.
Rep. Elijah Cummings and Donna Edwards, both Maryland Democrats, were among them. They said Obama had pledged if he wins the White House that he would help homeowners facing foreclosure on their mortgages. He also pledged to support changes in the bankruptcy law to make it less burdensome on consumers.
"It's not too often you get the future president telling you that his priority matches your priority," said Cummings.
Obama's rival, Sen. John McCain, who announced a brief suspension in his campaign more than a week ago to try and help solve the financial crisis, made calls to Republicans. His impact was not immediately clear.
Republican Rep. Sue Myrick of North Carolina, who said she was switching her vote to favor the measure, said of McCain: "They told me he was going to call me. He didn't."
Looking ahead to election day, she added, "I may lose this race over this vote, but that's OK with me. This is the right vote for the country."
The White House issued the latest in a series of grim warnings of the risks of defeat. "If the financial markets fail to function, American families will face great difficulty in getting loans to purchase a home, buy a family car or finance a child's education," it said in a written statement.
The vote on Monday staggered the congressional leadership and contributed to the largest one-day stock market drop in history, 778 points as measured by the Dow Jones Industrial Average.
Across the Capitol, Senate leaders reacted quickly, deciding to sweeten the bill with a series of popular tax breaks as well as spending on rural schools and disaster aid. They also grafted on a bill to expand mental health coverage under private insurance plans.
At the same time, the change in federal deposit insurance and the action by the SEC on an obscure accounting rule helped produce a steady trickle of converts.
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Associated Press reporters Jim Abrams, Chuck Babington, Alan Fram, Suzanne Gamboa, Kim Hefling, Andrew Miga, Andrew Taylor, and Erica Werner contributed to this story.

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1:44 p.m.

By JIM ABRAMS
Associated Press Writer

WASHINGTON (AP) - Millions of taxpayers, thousands of businesses and groups as diverse as solar power developers and natural disaster victims will see tax relief with the House vote Friday to approve and send to the president a $700 billion financial rescue plan.
The tax relief package attached to the rescue bill promotes renewable energy development and extends dozens of tax breaks from the critical research and development tax credit to breaks for such narrowly focused groups as motor sports racetrack owners, film producers and bicycle commuters.
The renewable energy part of the package alone, House Speaker Nancy Pelosi said, will "create and save half-a-million good-paying jobs in America immediately."
Virtually all of the tax breaks already exist. But many of them expired Jan. 1 for use in the current tax year, and the others will expire three months from now unless Congress renews them.
The largest group of beneficiaries in the tax portion of the financial rescue bill is about 20 million mainly upper-middle income taxpayers. Without congressional action, the AMT, with originally was supposed to affect only the very rich, would add some $2,000 this year to the tax bill of these people, most earning under $200,000 a year.
Thousands of businesses are waiting for renewal of the research and development tax credit, which expired at the end of last year. Without that credit, industry advocates say, high tech, biotech and aerospace companies would have trouble hiring the highly skilled workers needed to compete with foreign competitors.
The Information Technology Association of America reports an $18.5 billion drop in R&D activity since the beginning of the year, when the credit lapsed. The R&D credit extension would cost $19 billion over 10 years. The cost of the entire tax portion of the bill is close to $110 billion.
The renewable energy incentives include an eight-year extension of investment credits for solar energy, as well as breaks for wind, geothermal and other alternative sources. The solar industry says extension of the credits through 2016 would produce an extra 440,000 jobs and more than $230 billion in investments.
The measure also has $8 billion in tax breaks for disaster victims, $5 billion for higher education tuition deductions and $400 million in deductions for teachers who buy school supplies with their own money.
There are $3 billion in deductions for residents of states without income taxes that have state and local sales taxes. Extending the deduction would save Texans a projected $1.2 billion a year or an average of $520 per filer claiming the deduction, said Matt Mackowiak, spokesman for Sen. Kay Bailey Hutchison, R-Texas.
There are also some four dozen small provisions. Among them, with projected costs over 10 years:
-Extending an expired provision that gives Puerto Rico and the Virgin Islands a rebate against excise taxes charged on imported rum. The rebate, at $13.50 per proof gallon, helps finance local infrastructure projects. The cost is $192 million.
-Establishing a new tax credit ranging from $2,500 to $7,500 for purchasers of plug-in electric-drive vehicles. Cost: $758 million.
-Extending tax credits that expired at the end of 2007 for certain domestic corporations involved in American Samoa economic development. Cost: $33 million.
-Extending a credit of up to $10,000 for the training of mine rescue team members. The credit expires at the end of this year and the one-year extension costs $4 million.
-Enacting President Bush's proposal to erase the debt of the black lung disability trust fund at a cost of $1.3 billion.
-Extending for one year a seven-year depreciation timetable that NASCAR and other motorsport racing facilities have had for some years, the same tax break that amusement parks enjoy. Without the extension, the tracks would have to depreciate the cost of their improvements over 15 years, raising their taxes by $100 million.
-Extending for five years a program that reduces import duties on some wool fabrics. The tariff relief benefits U.S. worsted wool fabric producers that use imported fibers and yarns. Cost: $148 million.
-Increasing the single-year deduction in production costs, from $15 million to $20 million, that film and TV productions may take if the costs are incurred in economically depressed areas. In an effort to keep film and TV productions in the U.S., it also allows more companies to use a domestic production deduction. Cost: $478 million.
-Allowing commercial fishermen and others hurt by the 1989 Exxon Valdez oil spill in Alaska to average out damage awards over three years rather than taking a one-year hit from the IRS. Cost: $49 million.
-Extending two programs that fund rural schools and rural communities that have been relying on declining income from logging on federal land or have low property tax bases because they are located on or next to federal lands. This is a major issue in the West. Cost: $3.3 billion.
-Exempting wooden practice arrows used by children from an excise tax of 39 cents per arrow. Oregon's two senators and two Wisconsin representatives previously introduced legislation calling for the action, saying the tax was meant for more expensive archery arrows and is untenable for makers of toy arrows that may cost only about 30 cents apiece. The bill would affect about a half-dozen manufacturers nationwide, including one in Oregon; the Oregon senators said they didn't seek its addition to the bailout, however. Cost: $2 million.
-Allowing employers to exempt from taxation what they spend on some fringe benefits for workers who commute to work by bicycle, for example reimbursing the cost of parking the bikes. Cost: $2 million.
Some House members and radio-TV commentators have called for eliminating several of the measures, including those affecting wooden arrows, Puerto Rican rum, racetracks and film producers.
"All these things are called sweeteners in order to get votes from Democrats and Republicans in the House," conservative commentator Rush Limbaugh said at the opening of his show Thursday. "To get this bailout through the Senate and House, they've added pork. Surprise, surprise."

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1:35 p.m.

WASHINGTON (AP) - With the economy on the brink and elections looming, Congress approved an unprecedented $700 billion government bailout of the battered financial industry on Friday and sent it to President Bush for his certain signature.
The final vote, 263-171 in the House, capped two weeks of tumult in Congress and on Wall Street, punctuated by daily warnings that the country confronted the gravest economic crisis since the Great Depression if lawmakers failed to act.
Bush was poised to make a statement on the historic vote.
"We all know that we are in the midst of a financial crisis," House Republican Leader John Boehner of Ohio, said shortly before casting his vote for government intervention in private capital markets that was unthinkable only a month ago.
"And we know that if we do nothing, this crisis is likely to worsen and to put us into an economic slump like most of us have never seen."
Speaker Nancy Pelosi, D-Calif., said the bill was needed to "Begin to shape the financial stability of our country and the economic security of our people."

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1:26 p.m.

WASHINGTON (AP) - Congress has passed complex and highly criticized legislation authorizing $700 billion in government money to shore up the nation's stressed financial industry.

The 263-171 vote by the House sends the Senate-passed version to the White House for President Bush's signature. Among many features, the measure would allow the Treasury Department to buy up bad debt from various lending institutions.

Many members of the House voted for the bill even though said it was very attractive to them and to their constituents back home. The measure had been defeated in the same chamber on Monday, sending stocks on Wall Street into a record slide.

Announcement of the vote was greeted by applause.

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11:51 a.m.

WASHINGTON (AP) - After a week of tumult, an unprecedented government bailout of the financial industry gained ground in the House on Friday and leaders in both political parties expressed optimism the $700 billion measure would clear Congress by day's end for President Bush's signature.

With the economy showing fresh signs of weakness, the measure advanced past a key hurdle on a 223-205 vote.

An Associated Press tally showed 22 lawmakers who sent an earlier bailout bill to unexpected defeat on Monday had changed their minds and would vote in favor of the revised legislation, more than the dozen needed. Officials said changes made to the measure had sparked a far smaller number of defections among previous supporters.

"I'm optimistic about today. We're not going to take anything for granted but it's time to act," said House Republican Leader John Boehner of Ohio.

"I think it will pass," agreed Rep. Jim Clyburn, the chief Democratic vote-counter, as debate unfolded in the House chamber.

The Senate passed the measure earlier in the week on a bipartisan vote of 74-25.

"No matter what we do or what we pass, there are still tough times out there. People are mad - I'm mad," said Republican Rep. J. Gresham Barrett of South Carolina, who opposed the measure the first time it came to a vote. Now, he said, "We have to act. We have to act now."

Rep. John Lewis, D-Ga., another convert, said, "I have decided that the cost of doing nothing is greater than the cost of doing something."

Critics were unrelenting.

"How can we have capitalism on the way up and socialism on the way down," said Rep. Jeb Hensarling of Texas, a leader among conservative Republicans who oppose the central thrust of the legislation - an unprecedented federal intervention into the private capital markets.

If anything, the economic news added to the sense of urgency.

The Labor Department said initial claims for jobless benefits had increased last week to the highest level since the gloomy days after the 2001 terror attacks. Employers slashed 159,000 jobs from their payrolls, the most in five years. That came on top of Thursday's Commerce Department report that factory orders in August plunged by 4 percent.

The stock market opened higher on anticipation that the bill would pass, and the financial industry shakeout rolled on unpredictably.

Wachovia announced it had agreed to be acquired by San Francisco-based Wells Fargo & Co rather than by Citigroup. Executives said the new arrangement would keep the Federal Deposit Insurance Corp., on the sidelines, thus preventing any depletion of the government's fund that backs bank deposits.

The FDIC said it was sticking behind the Citigroup plan, leaving the fate of the bank in limbo.

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7:19 a.m.

WASHINGTON (AP) -- Rejected once amid public fury about bailing out reckless financiers, a $700 billion rescue package is getting a second chance in the House as voters anxiously ponder an economic meltdown that could wipe out their ability to borrow, plunder their savings and put them out of work.

Republicans and Democrats were jumping aboard the bailout as the House sped toward a make-or-break vote - a much-anticipated do-over after the plan met with a stunning defeat Monday, triggering a historic stock market plunge.

It was still unclear, though, whether leaders would have the dozen or so supporters needed to pass the measure.

The plan lets the government spend billions of dollars to buy bad mortgage-related securities and other devalued assets from troubled financial institutions. If it works, advocates say, that would allow frozen credit to begin flowing again and prevent a serious recession.

Black lawmakers said personal calls from Democratic presidential nominee Barack Obama helped switch them from "no" to "yes," as Republicans and Democrats alike said appeals from credit-starved small businessmen and the Senate's addition of $110 billion in tax breaks and other sweeteners had persuaded them to drop their opposition.

"I hate it," but "inaction to me is a greater danger to our country than this bill," said GOP Rep. Zach Wamp of Tennessee, one of the 133 House Republicans who joined 95 Democrats in rejecting the measure Monday, sending the stock market plummeting.

Others said they were agonizing as they decided whether to change course and back the largest government intervention in markets since the Great Depression. "I'm trying desperately to get to 'yes,'" said Rep. Carol Shea-Porter, D-N.H.

Obama and his Republican rival, John McCain, phoned reluctant lawmakers for their help.

Rep. John Lewis, D-Ga., told a closed-door meeting of House Democrats that he would support the bill after speaking with Obama about it.

Congressional leaders worked over wayward colleagues wherever they could find them.

Rep. Steny Hoyer, the second-ranking House Democrat, said Thursday there was a "good prospect" of approving the measure but stopped short of predicting passage - or even promising a vote.

"I'm going to be pretty confident that we have sufficient votes to pass this before we put it on the floor," Hoyer said.

Lawmakers were expecting to use at least some of 90 minutes scheduled for debate in choreographed question-and-answer sessions known as "colloquies," in which lawmakers ask for assurances about what the legislation will or won't do. That could make it easier for people switching their votes to explain why they did so.

The top Republican vote-counter, Rep. Roy Blunt of Missouri, did predict the measure would be approved.

President Bush said "a lot of people are watching" the House and was calling dozens of lawmakers searching for support for the rescue, a spokesman said.

Slowly but surely, converts were coming forward.

GOP Rep. Ileana Ros-Lehtinen of Florida, said she was switching her "no" vote to a "yes" after the Senate added some $110 million in tax breaks and other sweeteners before approving the measure Wednesday night.

"Monday what we had was a bailout for Wall Street firms and not much relief for taxpayers and hard-hit families," Ros-Lehtinen told The Associated Press. "Now we have an economic rescue package."

Republican Rep. Jim Ramstad of Minnesota also switched to "yes," partly because the Senate attached the bailout to legislation he spearheaded to give people with mental illnesses better health insurance coverage.

Rep. Gresham Barrett, R-S.C., also said he'd back it.

Democratic Rep. Emanuel Cleaver of Missouri was switching, too, said spokesman Danny Rotert, declaring, "America feels differently today than it did on Monday about this bill."

And Democratic Rep. Shelley Berkley of Nevada said she would back the bill after business leaders in her Las Vegas-area district made it clear how much it was needed. She said, "There isn't a segment of the population that hasn't been slammed and is not asking for some relief."

Rep. Elijah Cummings, D-Md., said he was on the verge of voting "yes," based on conversations with Obama. "I've got a man who I'm hoping will be president who's saying that's he's going to do the very things that I want done," he said. "It makes me feel a lot better."

Rep. Bobby Rush, D-Ill., also said Obama was asking him to reconsider his vote. "I'm seriously listening," Rush said.

The same tax breaks that helped satisfy some Republican critics angered conservative "Blue Dog" Democrats who are concerned about swelling the deficit. Still, Hoyer predicted the number of Democratic defectors "is going to be minimal."

The Senate breathed new life into the measure Wednesday after the stinging House defeat, voting 74-25 to approve the bailout, with additions designed to appeal to key constituencies.

In efforts to appease GOP opponents, it included raising, from $100,000 to $250,000, the limit on federal deposit insurance.

The bill also extends several tax breaks popular with businesses, provisions that are favorites for most Republicans. It would keep the alternative minimum tax from hitting 20 million middle-income Americans, which appeals to lawmakers in both parties. And it would provide $8 billion in tax relief for those hit by natural disasters in the Midwest, Texas and Louisiana.