House approves historic bailout bill

Tell us why this is interestingIn four long days, as credit markets froze, Democratic presidential nominee Barack Obama worked the phones with President Bush. California Gov. Arnold Schwarzenegger leaned on the California congressional delegation. The chairmen of General Motors and Chrysler allied with the small-town car dealer and banker in a full-court press on Congress. And in the end, they helped House Speaker Nancy Pelosi, a Democrat from San Francisco, engineer the biggest bailout of the banking system in U.S. history.

The overwhelming 263-171 House vote for the $700 billion rescue erased a stunning defeat Monday that shocked Pelosi and her GOP counterpart, Minority Leader John Boehner of Ohio. That defeat, and fear that inaction would lead to a once-in-a-century style economic collapse, set in motion the most extraordinary political alliance witnessed in modern times.

The nation's top leaders quickly rallied their combined forces behind an unprecedented and deeply unpopular government intervention in the U.S. economy, one that offended much of the public and the ideological wings of both parties just one month before a presidential election.

Three Bay Area Democrats switched their votes to yes: St. Helena's Mike Thompson, Petaluma's Lynn Woolsey and Oakland's Barbara Lee.

Riding the powerful political tailwind of a 74-25 bipartisan Senate vote Wednesday night, 24 Republicans and 32 Democrats changed to yes votes. They had spent two days at home hearing horror stories from small and large businesses shut off from bank credit lines and unable to float short-term loans to buy inventories or meet payroll. They heard from retirees who had seen their savings evaporate in the $1.2 trillion stock market plunge that followed the House rejection. And on Friday, they heard the news that 159,000 more Americans had lost their jobs in September.


Calls from Obama
Thompson and Lee got a call from Obama. Lee, the only member of Congress to vote against the use of force after the Sept. 11, 2001, terrorist attacks - and perhaps the one least likely to hand $700 billion to Bush's Treasury secretary - said she was convinced that she could "not afford to risk the potential consequences of inaction. ... I am confident that this is the right vote, even if it's not a popular vote."

Republican nominee John McCain, who announced with fanfare after the crisis broke that he was suspending his campaign to return to Washington to broker a resolution, made calls as well. But GOP members and aides said he did not show the urgency of either Bush or Obama in pushing for the bill.

Rep. Joe Knollenberg, R-Mich., who switched his vote to yes, said he had not heard from McCain but that he had "never talked to so many bank presidents." He heard from General Motors Chairman Rick Wagoner, Chrysler Chairman Robert Nardelli and Treasury Secretary Henry Paulson.

The U.S. Chamber of Commerce revved up an intense lobbying effort, along with state and local governments who warned that it had become impossible to float bonds or get bridge loans to cover normal spending while awaiting receipt of property and sales tax revenue. Some members were lured by the $150 billion in popular tax breaks added by the Senate. These extended shelter for 26 million upper-middle-income taxpayers from the dreaded alternative minimum tax, as well as popular business tax credits for renewable energy and research and development.

It was Paulson, joined by Federal Reserve Chairman Ben Bernanke, who stunned first Bush and then congressional leaders on Sept. 18 with dire alarms that the nation's financial system was on the brink of collapse and would require a huge government intervention. The warning from Bernanke, who in academic life was a leading authority on the Great Depression, was especially persuasive to Pelosi.