After a stunning defeat by House members yesterday of the financial system rescue / bailout proposal (HR 3997), talk is now beginning to center around a new plan of action which would begin in the Senate. At the moment, there is no real concern about the likelihood of the bill’s passage in the Senate with many Republican members already publicly supporting the proposal.
The collapse of Treasury’s financial rescue plan in the House sent Wall Street into a tailspin Monday and left congressional leaders looking for ways to recover — possibly by starting anew in the safer Senate.
Senate Republicans are more supportive of Treasury Secretary Henry Paulson and the massive $700 billion government intervention than are their House counterparts. And leading House Democrats believe that a strong Senate vote — coupled with turmoil in financial markets — will create enough pressure for the House to relent.
“The Senate should go first: Act on this bill, attach it to another and send it back to the House,” Illinois Rep. Rahm Emanuel, chairman of the House Democratic Caucus, told Politico. The same Senate route is an option Treasury is looking at as well.
With Rosh Hashanah beginning at sundown Monday, little activity was expected before Wednesday, but no one is talking any longer of a quick adjournment this week.
Such a plan is not without potential blowback, however, as the article goes on to mention:
At the same time, the rebellion among House conservatives was such that it could prove contagious. Treasury lost by a more than 2-1 margin among House Republicans, and as this sinks in, McConnell could then find it harder to keep his caucus united behind the bill. This is precisely what Senate Majority Leader Harry Reid is said to fear. While keeping the door open, the Nevada Democrat doesn’t want to be drawn back into a new set of negotiations about modifying the package.
The Senate would have to attach the rescue package onto an already-passed House tax / revenue measure as such bills cannot originate in the Senate per the Constitution.
Update: Bloomberg reports that the measure could be considered as early as tomorrow and that it may include some minor changes.