US Senate to Vote on $700 Billion Rescue Plan

Hoping to gain additional Republican support the Senate has added to the House version of the bill provisions to expand FDIC bank deposit limits and tax breaks. The vote is scheduled to take place this evening.

FDIC Chair Sheila Bair gave a seemingly timid endorsement to the expansion of FDIC deposit insurance saying that she was, "willing to endorse a temporary increase in deposit insurance limits." The Senate bill would temporarily increase the current $100,000 deposit insurance limit to $250,000. FDIC's Bair is unquestionably nervous over the additional strain on the insurance fund with several institutions still in jeopardy and no apparent increase in insurance fees. Currently, financial institutions pay as little as $1 per $100 deposit and the fund has already been expanded to temporarily cover money markets funds.

Tax breaks added to the legislation is also expected to bring Republican support. The adjusted legislation would extend business tax credits to the production of use of renewable energy sources, research and development, as well as expand consumer the child tax credit, protect millions of families from the alternative minimum tax, and provide relief to many victims of recent natural disasters.

The addition of deposit insurance expansion and tax breaks is expected to overcome some of the political opposition. Meanwhile, a swing in voter sentiment may give the legislation the final push. Many Americans watched the US markets dramatically descend during the voting down of the House version of the bill. Congress has reported a flood of email and voice mails reacting in fear of this legislation not being resurrected.

President Bush and the two Presidential candidates, Republican John McCain and Democrat Barack Obama have voice the necessity and urgency of this new Senate versus of the $700 billion rescue legislation.