WASHINGTON (Reuters) - For all of Wall Street’s disappointment over a failed government rescue, saving the plan to absorb $700 billion (388 billion pounds) in bad investments is in theory as easy as finding a dozen votes in limbo.
With lawmakers facing a razor-thin margin between passage and defeat, targeting that handful of possible crossover votes is the key to saving the bill that failed to pass on Monday, many lobbyists said.
“Leaders went into this vote with a list of those who were for it and those who were leaning,” said Kurt Pfotenhauer, a veteran lobbyist and head of the American Land Title Association. “You just go back to that list and try to get those guys back on board.”
The Dow industrials took their biggest-ever nosedive after the U.S. House of Representatives rejected a bill that would have Washington buy bad mortgage debts as a way to limber-up the global credit markets.
The almost 778-point plunge stunned Wall Street and was a rebuff to Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke, who conceived the plan.
Reversing that decision, however, is only a matter of flipping a dozen lawmakers who could tip Monday’s vote of 228 against and 205 in favour.
Lobbyists and Washington veterans say that should be a simple matter of targeting wavering ‘no’ votes and prodding them with some stark facts -- like how the market erased $1.7 trillion in shareholder wealth on Monday, which would have paid for the rescue twice-over.
Because proponents of the bill want it to pass with a bi-partisan majority, moderate Republicans are a sensible starting place.
Rep. Judy Biggert of Illinois and Rep. Steven LaTourette of Ohio are moderate members of the House Financial Services Committee who will certainly be feeling pressure from Wall Street to now back the plan.
South Florida has been hard-hit by the foreclosure crisis and so Miami Republicans Rep. Lincoln Diaz-Balart and his brother Rep. Mario Diaz-Balart might also be feeling pressure.
The legislation will have to be tweaked before lawmakers will be able to consider it again but not by much, said Francis Creighton, the top lobbyist for the Mortgage Bankers Association.
“This can be changed in an incremental way - maybe with more Congressional oversight - that could pull in another fifteen, twenty people or so,” he said.
If lawmakers hear enough angry phone calls and extract enough concessions to save face, the ones who voted “nay” might reverse themselves.
That work continued right after the proposal was rejected and House leaders promised to return on Thursday with another attempt to pass the legislation.
Lobbyists advised negotiators to turn their backs on the many Republicans who will not be swayed by arguments about the severity of the crisis.
“Clearly there is lots of volatility and lots of gyrations,” Rep. Jeb Hensarling, a Texas Republican, said when asked whether an 800-point drop in the Dow could nudge him to vote ‘yes’ for the plan.
Hensarling represents dozens of budget hawks on the Republican Study Committee which will not be swayed to vote for the plan and should be ignored by lawmakers, lobbyists said.
While Monday’s vote surprised many on Wall Street, Pfotenhauer said he has seen this kind of brinkmanship before in Washington.
“It is axiomatic that we never really know how much trouble we are in until it is almost too late,” said the former chief of staff to Republican Senator Gordon Smith.
Reporting by Patrick Rucker; Editing by Chizu Nomiyama and Bernard Orr