WASHINGTON — They held their noses and voted “yes.”
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“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. 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 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 jobs, but others — mostly Democrats — focused on the prospect that a new president could have a more significant effect on the economy than any one piece of legislation. Several of the switchers were members of the Congressional Black Caucus who said they changed 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.”
HOW THEY VOTED
Arizona’s entire House delegation had voted against the bailout on Monday, and four of the eight Arizonans did so again on Friday.
• Voting “yes:” Republican John Shadegg and Democrats Gabrielle Giffords, Harry Mitchell and Ed Pastor.
• Voting “no:” Democrat Raul Grijalva and Republicans Jeff Flake, Trent Franks and Rick Renzi.
OTHER DEVELOPMENTS
• Congressional approval of the government’s $700 billion financial rescue plan Friday did little to lift the financial markets. Wall Street ended an volatile week with the Dow Jones industrials falling 157 points. The major indexes suffered big losses.
• The government announced Friday it was hiring Barclays Global Investors of San Francisco and State Street Bank and Trust Co. of Boston to manage its program to purchase mortgage-backed securities.
• The head of the FDIC is standing behind the agreement it made with Citigroup Inc. for buying Wachovia Corp. despite Wells Fargo & Co.’s new $15.1 billion deal trumping Citigroup’s plan.
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