U.S. leaders optimistic about revived bailout

By Andrew Taylor, AP

WASHINGTON — Congressional leaders from both parties said they are hopeful that a US$700 billion U.S. financial industry bailout that derailed in the House of Representatives is back on track for quick passage, thanks partly to a provision increasing insurance for people’s bank deposits.

President George W. Bush planned to call lawmakers asking for their support ahead of a crucial Senate vote Wednesday night.

“I think the Senate thinks it has the votes and I think it probably will pass,” House Majority Leader Steny Hoyer, a Democrat said.

House Republican Whip Roy Blunt agreed that prospects for passage have improved, and he said he was particularly heartened by indications the legislation has become more appealing to constituents back home.

The plan for Wednesday night’s vote was set after leaders there agreed to add tax breaks for businesses and the middle class and increase deposit insurance in an attempt to revive the legislation rejected by the House.

“No one is glad we have reached this critical point. … Now is our time to work not as Democrats, not as Republicans, but as guardians of the public trust,” said Sen. Harry Reid, the Democratic majority leader. He said he was hopeful the measure could clear Congress within days “so that by this weekend rolling around, we will have done what we need to do for the American people.”

Republican Sen. Mitch McConnell, the minority leader, said, “We believe that we have crafted a way to go forward and to get us back on track.”

The White House tried to build support by warning of the consequences of failure.

“This morning we’re seeing increased evidence of the credit squeeze on small businesses and municipalities all across the country, so it’s critically important that we approve legislation this week and limit further damage to our economy,” White House spokesman Tony Fratto said.

Central bankers and political leaders in Europe and Asia are anxiously waiting for the U.S. to come up with a solution that has evolved into a global financial crisis threatening their economies and markets.

Democratic presidential nominee Barack Obama and his Republican rival, John McCain, planned to fly to Washington for the Senate vote, as did Democratic vice presidential nominee Joe Biden.