The Senate's resounding approval of a financial rescue plan Wednesday night pushed the proposal a step ahead, though ideological tensions in the House left its ultimate fate in question. The Senate voted 74-25 to approve the legislation -- known as the Troubled Asset Relief Program , or TARP -- which authorizes the federal government to buy up to $700 billion in illiquid assets clogging bank balance sheets and freezing credit markets. Its passage came just two days after the House of Representatives unexpectedly rejected an earlier version, sending stocks into a tailspin. The Senate inserted several measures into the bill in an effort to gain support from House members who rejected the bill. However, those measures also threatened to reverse some "yes" votes from fiscally conservative Democrats, known as "Blue Dogs," who are concerned about their effect on the federal budget. Strong opposition remained from some House members who were diametrically opposed to the basis of the bill as well. Anti-TARP members range from free-market conservatives who consider it akin to socializing the financial sector, to liberals who don't want to spend a dime of taxpayer money to bail out Wall Street banks that made bad decisions. All told, 12 representatives must switch their votes to overcome Monday's 228-205 defeat of the bill. Congressional leaders, including House Financial Services Committee Chairman Barney Frank (D., Mass., indicated that there was likely enough support to approve the measure. House Republican leader John Boehner (R., Ohio) and Republican Whip Roy Blunt (R., Mo.) were urging members to support the bill, according to the Associated Press. President George Bush urged House members to vote "yes," predicting economic turmoil otherwise.
"This issue has gone way beyond New York and Wall Street," Bush said during a press conference Thursday morning. "This is for productive, hard-working people who are worried about their savings, worried about their jobs, worried about their small businesses." Still, others, like Democratic leader Steny Hoyer (D., Md.) indicated that additions to the bill, particularly the tax breaks, may hurt its chances of survival. The Dow Jones Industrial Average plunged a dramatic 7%, or 777 points, after the House rejected the bill on Monday. While the stock market recovered roughly half its losses Tuesday and was flat Wednesday, it is down more than 200 points again Thursday as traders await word of what the House will do. Credit markets also remain in dire straits, with limited availability and short-term lending costs running incredibly high. The year-long credit crunch reached crisis proportions early last month, with a bankruptcy filing by Lehman Brothers, Merrill Lynch's ( MER) sale to Bank of America ( BAC) and government takeovers of AIG ( AIG), Fannie Mae ( FNM) and Freddie Mac ( FRE). The federal seizure of Washington Mutual, much of whose assets were bought by JPMorgan Chase ( JPM), and the federally brokered deal of Wachovia ( WB) to to Citigroup ( C) also have rattled nerves.