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 ABCNews.com. "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.
Senate Leaders Confident Bailout Will Pass
Senate leaders were confident during news conferences Wednesday that the measure would pass in the Senate, but stopped short of saying they were confident it would pass in the House when it comes up for a vote for a second time on Thursday or Friday.
Sen. Mitch McConnell, R-Ky. , a leading Republican negotiator on the bill, said, "I'm not going to handicap what's going to happen in the House."
"I am confident it will work in the Senate and optimistic it will work in the House," McConnell said.
Reid, said, "I would not have moved forward on this if I didn't think the chance in the House was good."
When pressed on the issue, Reid added, "I hope that this will help, not hurt" the bill's chance of being approved.
White House spokesman Tony Fratto said the president was calling senators on the upcoming vote, but not House members.
"We're going to keep working today and we're going to work tomorrow when the House takes it up," Fratto said.
Sens. Barack Obama and John McCain left the campaign trail so they could return to Washington in time for the vote. Democratic vice presidential candidate Sen. Joe Biden will also be in Washington for the vote.
It will be the first time the presidential candidates are back in Washington since last week, when McCain suspended his campaign to concentrate on the economic crisis, when both he and Obama met with President Bush on the issue.
Shortly after that meeting, the bailout deal unraveled amid bitter accusations that each side had politicized the issue and contributed to the shocking House vote to defeat it.
Bailout strategists hope that approval by the Senate will put additional pressure on the House to finally approve the bill.
McCain projected confidence on the bill's passage during a speech at the Harry S. Truman Library in Independence, Mo. He said Congress has "awakened to the danger," and predicted doom if the bill should fail.
"If the financial rescue bill fails in Congress yet again," McCain said, "the present crisis will turn into a disaster."
Obama, addressing a rally in LaCrosse, Wis., said Congress shouldn't delay any longer.
"To the Democrats and Republicans who have opposed this plan, I say this -- step up to the plate, do what's right for the country, even if it's not popular, because the time to act is now," Obama said.
Squabbling over the $700 billion bailout can't end soon enough for Jack Welch, the former CEO and chairman of General Electric, who warned on "Good Morning America" today that "every day we wait, every minute we wait, increases the depth of the downturn in the economy and the length of it."
Welch told "GMA" that whatever gets passed must be passed soon and must pass two tests: "It must free up credit and increase confidence."
The former G.E. titan dismissed the significance of Tuesday's stock market surge.
"We're talking about the wrong thing when we're talking about markets, the stock market's up, the stock market's down," Welch told "GMA." "The credit market is tighter [Tuesday] than it was Monday, than it was last Friday. So it continues to tighten. And that's the game. It's all about credit and confidence."
Welch said the effects of the tighter credit are already being felt by ordinary Americans in the loss of jobs, as well as businesses.
"The job thing has already started. The job thing is running away on us," Welch said, adding, "The fourth quarter could be down significantly."
Welch said a conversation with a banker illustrated how tight the credit market has become.
"He can give mortgages, but he's so selective in giving them that he's holding back cash to be sure of any eventuality. These credit markets are tighter than we have seen," Welch said.
In addition, he said, "We're seeing the lowest consumer spending in 20 years, so this is really tough."
The Associated Press and ABC News' Sunlen Miller and Bret Hovell contributed to this report.