Updated from 3:15 p.m. EDT.
The $700 billion financial rescue plan found approval on its second trip before the House of Representatives, with members voting to purchase illiquid assets from the financial system in addition to several amendments made by the Senate.
The House voted 263 to 171 in favor of the legislation, which is expected to ease strains in the credit markets and help kick-start the economy. All three major U.S. stock indices pulled back from their session highs on the plan's passage, but remained in positive territory.
Approval of the $700-billion plan comes four days after
an earlier version, sending stocks into a tailspin. During Monday's vote, only 205 representatives voted to pass the bill.
On Wednesday, the Senate gave the legislation -- known as the
, or TARP -- resounding approval with a 74 to 25 vote, although the Senate inserted several measures in an effort to gain support from House members who originally rejected the bill.
Among the tax breaks added to the TARP proposal was one that would allow middle-class taxpayers to avoid the controversial alternative minimum tax. The AMT was put in place to garner more tax revenue from the wealthy, but has been criticized for pinching the middle-class as well. Another measure provided exemptions for research and development, as well as renewable energy, to help spur economic growth.
Another addition lifted the amount of funds that the Federal Deposit Insurance Corp. will cover in an individual bank account, to $250,000 from $100,000. The boost in insured deposits was a popular measure that found support on both sides of the aisle.
"We have in essence stopped the bleeding that was going on ... in a thoughtful and intelligent manner that has in the short-term rescued our economy," John Larson, vice chair of the House Democratic Caucus, said during a press conference.
Before signing the bill, President George Bush said the legislation will take time to have a full impact on the economy, which continues to face serious challenges. He praised its passage, however, as an important first step.
"By coming together on this legislation, we have acted boldly to help prevent the crisis on Wall Street from becoming a crisis in communities across our country," Bush said. "We have shown the world that the United States of America will stabilize our financial markets and maintain a leading role in the global economy."
Treasury Secretary Henry Paulson thanked lawmakers for supporting the bill "at a critical stage in the election calendar." He pledged to "rapidly" but "methodically" deploy the new powers.
"There is no one-size-fits-all solution to alleviating the stress in our financial system," Paulson said in a statement. "Each situation will be different and we must implement these new programs with a strategy that allows us to adapt to changing circumstances and conditions, and attract private capital."
Chairman Ben Bernanke praised the passage of the rescue plan, pledging to work closely with the Treasury as it undertakes the new initiatives.
"I applaud the action taken by the Congress," Bernanke said in a statement. "It demonstrates the government's commitment to do what it takes to support and strengthen our economy. The legislation is a critical step toward stabilizing our financial markets and ensuring an uninterrupted flow of credit to households and businesses."
The provisions stand to sap tax revenue and increase the amount of money the government is potentially on the hook for -- something that cost-conscious, fiscally conservative legislators who formed the bulk of the opposition to the plan may oppose.
Joe Barton (R., Texas) told
that he voted again against the financial rescue plan, saying that the bill didn't change radically from the version rejected earlier in the week.
"It didn't fundamentally address the problem," Barton said. "We simply put $2 trillion of taxpayer money at risk ... We didn't do anything to help minimize the risk to the taxpayer with a revenue offset in this bill."
Adam Putnam (R., Fla.) said during an interview with
before the vote that the bill is not geared toward helping the stock market but instead towards unlocking the credit markets.
"The psychology is an important piece
but we should not use the Dow as our only barometer on this issue," Putnam said. He did add that the bill lost some "yes" votes due to the add-ons from the Senate.
Retirement funds and investments took big hits on Monday when the Dow plunged a whopping 777 points, or 7%, after the House rejected the measure, and credit markets have tightened up dramatically, making it harder for consumers and small businesses to get loans. Lawmakers were reportedly more receptive to the rescue bill following Monday's swoon.
The tone of media coverage has also shifted, from commonly referring to the measure as a Wall Street "bailout" at first, to now calling it a "rescue plan" or "intervention," while making an effort to explain its potential benefits to the U.S. economy.
The year-long credit crunch reached crisis proportions early last month, with a bankruptcy filing by
Bank of America
and government takeovers of