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Senate Passes Relief Package 74-25

Commentary by Barclay's Capital Solar Energy Equity Research Analyst Vishal Shah

OVERALL THOUGHTS:    The Senate passed legislation that combines the House-failed TARP bill with an increase in FDIC insurance coverage (from $100k to $250k) and the Senate's (only partially paid-for) tax extender package.  Focus now shifts to the House, where obviously the legislation has faced a tougher hurdle.

Key Question:  Does the House vote on the exact Senate-passed bill or does it make modifications to it?

The Senate has jammed the House Democrats to a degree.  The FDIC component makes the bill more palatable to incremental House Democrats and Republicans and the tax piece appeals to House Republicans.  The lack of offsets for the tax piece, however, is anathema to many moderate (so-called "Blue Dog" Democrats).  The leaders on both sides are now trying to figure out what the net vote impact is of the Senate changes.
 
According to lawmaker statements and staff contacts, the first option is for the House to try to gather the votes needed to pass the exact Senate-passed bills.  Look over the next 36 hours, for continued confirmation that this remains the first option.  The target is for the House to pass the Senate's bill on Friday.  If, however, the 12-13 votes likely needed from Monday's defeat are not forthcoming (either because some supporters switch to opponents or if too few new 'yes' votes materialize), the leaders will be forced to go to option two which would mean additional modifications in search of the needed votes.  This would certainly add time to final enactment of a bill and could elicit a stalemate that worries markets and global policymakers.
 
WIND/SOLAR ENERGY:  Tax credit extensions on the cusp of becoming law. All year extensions of the renewable energy tax credits have been stalemated over a partisan and cameral dispute of tax offsets.  The Senate has now added its tax bill (one year for wind/eight for solar) to the large relief legislation which it just passed.  House Democrats are displeased with the Senate's move but the importance of passing the larger relief legislation has led House Democratic leaders to make a concerted run at passing the Senate bill on Friday, which would be a significant positive for wind and solar.