The Senate Tests the Paulson Plan Again

As early as this Wednesday, senators are going to examine a revised bailout plan for the American financial system. Democrats and Republicans agreed to include more aid to the rescuers in this new version. The House of Representatives closed today and will reopen next Thursday.

After the representatives grumbled over the task, it’s now the senators who, as soon as Wednesday, have to grapple with the Paulson Plan to bailout the American financial system. The Senate Majority Leader, Harry Reid, made that officially known Tuesday night.

Nevertheless, the plan had been modified to better incorporate the interests of the rescuers, who are sickened by the handouts given to those responsible for the crisis; in the eyes of Americans, they are the bankers and traders of Wall Street.

Democrats and Republicans have so far agreed Tuesday on a “Plan B”, a chapter on the protection of particular banks. The two candidates in the election have supported this idea. Barack Obama has thus far put forth the proposition that the FDIC (Federal Deposit Insurance Corporation), the federal American organ for savings accounts insurance, increase guaranteed savings held by individuals and small businesses from 100,000 to 200,000. The FDIC functions like a mutual insurance company, and also plays the role of watchdog of the banking landscape. The proposition has been immediately taken up by John McCain. He has equally evoked a bottom of the Treasury, the Exchange Stability Fund that could use its $250 billion to recapitalize financial establishments in its hour of need.

Increasing the maximum of assured deposits from $100,000 to $250,000 by the authorities in case of bankruptcy would able to garner the support of regional banks, which are a powerful lobby in Congress, and could convince the missing 12 representatives in the lower chamber for whom the plan was adopted. State support for monetary funds after that one between them had been declared incapable to guarantee capital policyholder, making it less attractive than deposit banking. In addition, authorities intervened to save the big banks like Wachovia and Washington Mutual, but not the smaller, struggling banks.

The Senate’s working just as hard to add a provision that would allow banks to not record the market value of their assets in their account statements as strictly. These last few months, much has been considered as the rule of “mark-to-market” had made the situation worse. It has pushed the banks to mark down their market value in their statements that aren’t found in any market, what had downgraded their solvability, increased mistrust and pushed banking establishments to put other assets on the market, etc.

Members of the high chamber equally thought about tax cuts for the middle-class and the owners of solvent real estate, and even planning some supplemental benefits for the unemployed. The haggling might be intense in the Capitol today. Congressmen in favor of the plan hope a majority in the Senate will create a favorable dynamic that will overtake the opposition in the House of Representatives.

In order to convince the Congress to adopt a bailout plan, even large corporations like Microsoft, Verizon and General Electric have gone there to lobby congressmen since Monday, according to the Wall Street Journal.

The two candidates again are equally again kept in the loop by telephone with Geroge Bush, who had assured Tuesday that efforts would continue to get the plan adopted. Obama, like McCain hopes to calm dissenting voices to the plan in the House of Representatives. The buyback of dubious assets from the banks, some $700 billion, had been shot down Monday after two-thirds of Republicans and several Democrats voted against the bill.

If the bill passed by the Senate is judged to be less risky, its second chance in front of representatives (The chamber is closed this Thursday in observation of the Jewish New Year) could again constitute a critical moment. More than the content of the plan, it’s the appreciation of the House by the general public that will be tested next Nov. 4.

Some polls show that between 66 and 75 percent of Americans are against this plan. They suggest that it’s a gift to Wall Street and to the bankers who should be held responsible for their actions.