The modified TARP bill will be voted on by the U.S. Senate late Wednesday. The plan includes the Republican favored proposals to increase the FDIC's deposit insurance to $250,000 from $100,000 and to grant a two-year extension of individual and corporate tax breaks (worth $149B). The central part of the plan remains the same, the $700B fund to take toxic securities off bank balance sheets. Nothing is being taken for granted, but there seems to be some confidence in expectations that this package will attract enough votes as it includes the Republican favored measures, which -- and indeed because -- they are likely to mollify at least some of public cynicism of the "Wall Street rescue." Washington pundits reckon that a successful Senate vote should lead to a successful House vote too. Meanwhile, the SEC has taken a significant step in relaxing mark-to-market rules -- not doing away with them completely as some have argued for, but allowing banks to value mortgage backed securities with pricing models that nearer reflect their cash-flow worth rather than basing values on fire-sale prices in a non-functioning market. Hopefully credit markets can start to function better soon.
