Bloomberg:

The U.S. Senate will try to salvage a $700 billion financial-rescue package after the measure was defeated in the House of Representatives. The lawmakers won't have a lot of room to negotiate.

While they need to tweak the legislation enough to win over reluctant Republicans, they'll risk losing votes from Democrats if they veer too far from the delicate compromise that congressional leaders hammered out with the U.S. Treasury.

``They're not going to totally revamp the bill,'' said Pete Davis, president of Davis Capital Investment Ideas in Washington, who spoke to House and Senate leaders yesterday. ``They'll make some minor changes and pass it. This is all about political cover.''

Well, good. Never mind that the voters do. Not. Want.

``We don't intend to leave here without the job being done,'' said Banking Committee Chairman Christopher Dodd, a Connecticut Democrat, who said the senators may deal with the bill as early as tomorrow.

Funny. I always thought it was our elected representatives job to "represent."

To pick up the 12 votes needed to pass the bill in the House, the bill will need some cosmetic changes, lawmakers and political analysts say. Ninety-five Democrats joined the 133 Republicans who voted against the bill. Both sides are looking for changes.

Cosmetic changes... Like lipstick on Hank Paulson?

House Republican conservatives are likely to keep pressing for a mandatory insurance program they initially proposed for mortgage-backed securities. They may also try to force the Securities and Exchange Commission to suspend mark-to-market accounting and require bank regulators to assess the real value of the troubled assets, lawmakers say.

Either measure could drive away Democratic votes. ...

Some Democrats want a provision that would allow bankruptcy judges to alter the terms of a home mortgage for individuals in bankruptcy, even reducing the principal balance. That would be a deal-killer for many Republicans, a danger that presidential nominee Barack Obama recognized: He opposed including that in the original bill, angering fellow Democrats. ....

House Majority Leader Steny Hoyer said he expects his chamber to be ready to take up the plan again after a Senate vote. ``We're not out of business until this is addressed,'' Hoyer said.

Hoyer said he has spoken with Republican Whip Roy Blunt and both are committed to working together on a compromise.

All our "leaders" are in it together!

But it looks like the only thing left is more strategic behavior and more shock:

``It's just not acceptable for Congress to essentially tell Main Street or Wall Street to drop dead,'' [Nice to see Nutting's "drop dead" riff propagating] said Chris Lehane, a Democratic consultant who was former Vice President Al Gore's communications director. ``The Dow dropping 777 points is a pretty powerful force to find another 12 votes.''

Good God. It takes an act of Congress to prop up the Dow? Does nobody see how fucked this is? And how easy to manipulate?

NOTE Via Calculated Risk.