Bush signs $700 billion rescue

WASHINGTON — They held their noses and voted "yes."

Now lawmakers in both parties — along with President Bush — are waiting to see whether their historic $700 billion bailout for the financial industry can stabilize the tottering economy and prevent a broader meltdown.

"We have acted boldly to help prevent the crisis on Wall Street from becoming a crisis in communities across our country," Bush said shortly after the plan cleared Congress, although he conceded, "our economy continues to face serious challenges."

Reluctant Democrats and Republicans banded together Friday to approve the rescue plan — the broadest government intervention in markets in decades — on a 263-171 vote. Bush swiftly signed it.

Just a month before elections in which the sour economy is the dominant theme, Congress pushed the package through in a striking turnaround from the measure's failure earlier in the week, which sent the stock market plummeting.

Friday's vote capped an extraordinary two weeks of tumult in Congress and on Wall Street, punctuated by urgent warnings from Bush that the country confronted the gravest economic disaster since the Great Depression if lawmakers failed to act.

And it was followed by somber reminders on Wall Street, where enthusiasm over the rescue gave way to worries about obstacles still facing the economy, sending the Dow Jones industrials dropping 157 points. The Labor Department said earlier in the day that employers had slashed 159,000 jobs in September, the largest cut in five years.

Scores of jittery lawmakers who opposed the measure Monday hopped aboard a revised version in the final vote, fearing a crushing economic contagion that was spreading to their constituents.

"Let's not kid ourselves: We're in the midst of a recession. It's going to be a rough ride, but it will be a whole lot rougher ride" without the rescue plan, said Rep. John A. Boehner, R-Ohio, the minority leader, as he prepared to cast his vote.

Treasury Secretary Henry Paulson pledged quick action to get the program up and operating.

The bailout, which gives the government broad authority to buy up toxic mortgage-related investments and other distressed assets from tottering financial institutions, is designed to ease a credit crunch that began on Wall Street but is engulfing businesses around the nation.

"In these past two weeks, we've seen things we never thought we would see before in terms of the economic insecurity of our own country," said House Speaker Nancy Pelosi, D-Calif. She said the measure would "begin to shape the financial stability of our country and the economic security of our people."