…And now it goes back to the House. The Washington Post’s Lori Mongtomery and Shailagh Murray report that the Senate approved Wednesday night, 74-25, a plan to have the Treasury Dept. buy up to $700 billion in now almost worthless mortgage-related assets. The taxpayers would supply the $700 billion, which is why a group of rank-and-file House members sent the bill to a stunning defeat on Monday.

But the bill the House votes on today is different than the one that failed– and far different than the "clean" bill Treasury Sec. Henry Paulson first proposed. The Senate proposal includes an array of changes to the tax system, some with only a tenuous connection with the mortage crisis. For example, a loophole that allows hedge funds to avoid taxes by setting up offshore shell companies would be closed. There is also a provision to give tax breaks for people who do business in Washington, D.C. There are even tax credits for using alternative energy.

Another significant non-mortgage provision requires insurance companies to provide the same level of coverage for mental illnesses as other maladies. The basic fairness argument underlying "mental health parity" was primarily advanced by the late Sen. Paul Wellstone (D-Mn.).  It is heartening to see it finally pass the Senate.

That said, mega-bills like this one are the stuff of federal agency nightmares. Can the govt. execute major changes to the tax code and insurance system (I didn’t even get into Federal Deposit Inusrance Corporation changes here)? It seems that instead of a major overhaul to the financial regulatory system, this bill proposes dozens of smaller changes.-MB

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