WASHINGTON (Reuters) - The House of Representatives voted on Monday to begin debate on legislation for a financial markets rescue plan, clearing the way for a final vote on the measure later in the day that would send it to the Senate.
The plan would give the Treasury Department up to $700 billion in buying power to acquire mortgage assets from troubled financial institutions.
If the measure passes the House, it will be sent to the Senate for a vote that is expected by Wednesday. The legislation would then go to President George W. Bush for his signature and enactment.
Debate in the House could be prolonged by skeptics of the plan. Rep. Barney Frank, the chairman of the House Financial Services Committee, said he and colleagues face “a tough vote.”
“We regret the market conditions which have made this decision day necessary,” he said, opening debate on the legislation. “No one is happy that we have seen the failures that we have seen.”
Since the spring, Wall Street giants like Bear Stearns and Lehman Brothers have failed while large commercial banks like Washington Mutual and Wachovia have been sold off at fire-sale prices.
Once the plan becomes law, the Treasury will have to establish the process by which it will buy the hard-to-trade assets that have clogged balance sheets and led to tighter lending. Policy-makers hope that by loosening credit markets, they can help restore the financial system to health.
House leaders are pushing for a vote on the legislation by early afternoon, ahead of observance of the Jewish New Year that begins at sundown.
Lawmakers agreed to begin debate by a narrow margin with 220 votes in favor and 198 against. Only 11 Republican lawmaker voted to begin debate on the measure while 181 voted against. Among Democrats, the votes were 209 in favor and 17 against.
Leaders of both parties have encouraged their members to support the plan.
Frank said lawmakers are in the difficult position of being called upon to prepare “for something that has not happened but that you think is going to happen.”
Under the plan, Treasury would focus on buying investments tied to the floundering housing market which has been battered by defaults and foreclosures.
Reporting by Patrick Rucker; Editing by Chizu Nomiyama