Bailout Bill Basics: From TARP to Tax Breaks

The bill passed by the Senate includes more than just bank aid.

ByABC News
October 1, 2008, 7:34 PM

Oct. 2, 2008 — -- The government rescue plan approved by the Senate Wednesday night includes the provisions of a bill defeated Monday by the House of Representatives as well as new provisions known as "sweeteners" -- measures that the bill's supporters hope will persuade opponents to the original legislation, namely members of the House, to change their minds.

The sweeteners could convince reluctant representatives that the bill "is in the overall interests of their constituents," said Ed Paisley, of the Center for American Progress, a progressive think tank.

The bill's new provision includes a host of tax breaks, a temporary increase in the size of bank accounts insured by the Federal Deposit Insurance Corp. and several more esoteric measures, including a requirement that health insurance companies provide more coverage for mental health services, a tax benefit for victims of the 1989 Exxon Valdez oil spill, even a tax exemption for makers of children's wooden arrows.

The heart of the bill, however, remains a plan to provide the Treasury with $700 billion to buy troubled assets from financial institutions -- an effort that proponents say will help ease the credit crunch by allowing banks to clear their balance sheets and lend money.

Here is an overview of some of the basics of the bill:

Buying Mortgages