This explains the brinkmanship over and expanding size of the bailout bill too. It was perceived as being extremely unfair from the beginning and has been getting fairer — and larger — as it has been getting approval from more folks. As an example, in order for the bill to get approval from the floor leaders in the US Congress, Bernanke and Paulson relented and included measures that capped unreasonably high executive salaries.

When the bill failed to pass the House, it was a bipartisan rejection. In the couple of days preceding the tabling of the bill in the US Congress, there was enormous campaigning in the media and the blogosphere against the bill. As The Wall Street Journal put it: “ [it] followed an intense outpouring of voter anger, fanned by politicians, interest groups and media on the left and right.... Voters opposed to the deal deluged Capitol Hill with letters, emails, phone calls and faxes over the past week. Fierce resistance from both ends of the political spectrum drove lawmakers to vote against the economic-rescue plan.” It went on to quote Darell Issa, a congressman from California saying that “the vast majority of my voters looked at this as a bailout for Wall Street.”

Further tinkering of the bill in favour of Main Street led to some sweeteners being added that may be responsible for the bill having been passed by the senate. These include sweeping changes in language; the limit of FDIC insured bank deposits from $100,000 to $250,000 to counter the impression gaining ground among depositors that you better have your money in big banks that are “too big to fail”. Smaller banks were nervous that their deposits might experience a flight. Modifying troubled mortgages, tax breaks for a much larger section of individuals and businesses being the prominent ones were the other changes. Finally, the whole bill is tied to insurance regulations changes in favour of those with mental health disorders, a long pending demand. This is Step 2 in the relenting process, which as The New York Times said, allowed lawmaker to “say they voted for increased protection for deposits at the neighborhood bank, income tax relief for middle-class taxpayers and aid for schools in rural areas.”

... contd.