As is often the case in situations like these, I’m finding that the lobbyists I talk to have a far keener understanding of the state of play of this financial bailout package than anyone else at the moment. The trade associations, in particular, are working this one very hard, as their members are saying they are already feeling the effects of the bill’s failure in very real ways: no credit for basic necessities like meeting payroll and buying inventory, customers in automobile showrooms who can’t get loans, that kind of thing.
For many lawmakers, voting against the bill yesterday was the most cynical kind of move. They figured that it was going to pass, so a “no” vote was essentially a free shot. They could tell their infuriated constituents: “Well, it wasn’t my fault..” Calls from constituents are still running heavily against the bill (and take note of Jay Newton-Small’s item below about the email servers crashing on the Hill), but the lobbyists are hearing some softening in the congressional offices they are calling. Yesterday, the aides they talked to were telling them: “My boss says not only no, but hell no.” Today, it’s more like: “He really can’t see a way to changing his vote…” Hint, hint.
So what might bring them around? That, of course, is the hard part. The problem is that every move that might bring aboard a few Democratic votes (giving bankruptcy judges power to reset the terms of mortgages, adding an economic stimulus package) loses Republican ones. And the opposite is true for measures that might bring a few GOP votes, such as tossing in a few new tax breaks. Two things, however, do seem to be gaining bipartisan momentum: raising the limits of insured deposits to $250,000 and changing accounting rules, so that banks don’t have to mark down the assets on their books to market value.
UPDATE: Commenter ny nick is skeptical about these reports that credit is drying up and asks: Where’s the evidence to back this up?
Here’s how our colleague Barbara Kiviat describes the situation at the moment.