Candidates Leave Campaign Trail, Head to DC for Bailout Vote

Sen. Harry Reid mentions possible insurance bankruptcy, but later backtracks.

ByABC News
October 1, 2008, 8:37 AM

Oct. 1, 2008— -- The Senate is poised to pass a revised Wall Street bailout bill tonight, but amendments to the controversial measure may raise the anger of some House Democrats and imperil its chances of approval in the House for the second time this week.

Senate Majority Leader Harry Reid, D-Nev., pressed for passage, with the alarming news that one of the country's premier insurance companies was about to go bankrupt if the crisis was not quickly resolved.

"We don't have a lot of leeway on time," Reid told reporters in the Capitol. "One of the individuals in the caucus today talked about a major insurance company -- a major insurance company -- one with a name that everyone knows that's on the verge of going bankrupt. That's what this is all about."

He did not identify the insurance company, and later in the day Reid spokesman Jim Manley said the senator was speaking broadly and not referring to anything specific.

"Senator Reid is not personally aware of any particular company being on the verge of bankruptcy," Manley wrote in an e-mail to "Rather, his comments were meant to refer to the conditions in the financial sector generally. He regrets any confusion his comments may have caused."

The new Senate version of the bailout bill has been sweetened by additions that would allow the Federal Deposit Insurance Corp. to raise the amount of bank deposits it insures from $100,000 to $250,000, a move expected to help small businesses.

The Senate bill also includes tax breaks for businesses and the middle class, something the Senate has been trying to pass for the past several years and which the House has rejected in the past because the Senate does not include corresponding cuts to make up the difference in the budget.

House Majority Leader Steny Hoyer, D-Md., told NBC's "Today" show this morning that he feared the tax breaks could make it harder to win Democratic support in the House.

"There's no doubt the tax package is very controversial," Hoyer said. "There's no doubt in my mind that the Senate added this because they thought that's the only way they could get it passed."

Hoyer feared the tax issues would arouse the ire of the "Blue Dogs," a caucus of 49 conservative House Democrats who have blocked the tax breaks in the past, arguing that tax breaks without spending cuts would increase the nation's deficit.

The Blue Dogs split almost evenly when the House shocked the Bush administration and defeated the bailout earlier this week.

The original bailout bill was defeated 228 to 205, meaning another 12 votes are needed to win passage. Congressional head counters are uncertain whether the tax breaks could cost the Bush administration more than a dozen Blue Dog votes.