The House on Wednesday night approved a compromise worked out with the Bush Administration to pour an additional $30 billion into the savings and loan bailout.
The key 213-197 vote came 24 hours after the House, rebelling against leaders of both parties, rejected four separate proposals for financing the bailout. After accepting the compromise, the House then passed the amended bill by a 192-181 margin.
Negotiators will work out minor differences between the bill and a version passed by the Senate last week.
“It’s the easiest thing politically to say, ‘Damn the S&L; scandal,’ ” said Rep. Henry Gonzalez (D-Tex.), chairman of the Banking Committee, in pleading for support of the compromise. “But we have no choice.”
Failure to continue paying for the bailout, he said, would bring disaster and “invite a run on our financial institutions.”
“If there has been one action that has outraged Americans from Maine to California, it has been the S&L; fiasco,” said Rep. Bernard Sanders (I-Vt.). “I’ll be damned if I will vote for a bill that will stick it to the working people” to pay for a bailout they did not cause, he said.
The major gain for liberals in the bill was permission for the bailout agency, the Resolution Trust Corp., to sell single-family homes to low-income families without regard to any minimum purchase price. Such sales would have been restricted in the bipartisan version rejected Tuesday night.
The compromise omitted other provisions backed by liberals, including a goal of having 25% of the contracts awarded by the bailout agency, the Resolution Trust Corp., earmarked for companies owned by women and minorities.
Instead of that provision, the compromise simply requires the agency to make public reports on its performance in hiring and contracting with minorities and women.
It also sets goals for the corporation in selling real estate and other assets inherited from thrifts, and in managing insolvent thrifts. The agency would be required to report on its progress before asking for more money.
The compromise was worked out by Gonzalez; Rep. Chalmers Wylie of Ohio, senior Republican on the Banking Committee; House Speaker Thomas Foley; Republican Leader Robert Michel, and Treasury Secretary Nicholas F. Brady.
The purpose of the money is to protect depositors in failed S&Ls;, but Congress’ balkiness at providing it does not immediately threaten deposits in the 192 insolvent thrifts under government control.
The trust corporation typically raises cash to meet depositors’ demands by selling seized institutions’ most readily marketable assets. If that fails, it has a $5-billion line of credit with the Treasury. It also has the option of asking the Federal Home Loan Bank or the Federal Reserve systems for an emergency loan.
In the long run, if Congress continued to withhold funds, it would call into question the so-far ironclad federal pledge to protect deposits up to the $100,000 insurance limit.