THE $700 billion (£380 billion) bailout plan won the approval of the House of Representatives on Friday — but not before politicians added lots of grease to its wheels.

An earlier version was rejected by the House, sending the stock markets into freefall and further tightening the credit markets. Companies small and large are finding loans hard to secure. On Friday it emerged that California, America’s largest and most prosperous state, was having trouble securing credit.

In essence, the new legislation follows Treasury secretary Hank Paulson’s initial plan to buy “toxic” mortgage investments from troubled finance firms. The details of the plan are still being worked out. The Treasury will decide how to spend the money and will present a plan within 45 days of the passage of the bill.

After a huge public and political outcry against a bill seen as a bankers’ bailout, though, the legislation was sweetened to win over voters, both in the House and at home. Amendments have curtailed the Treasury’s powers. The money will now be doled out in three parts.

Oversight boards will keep tabs on the Treasury’s management of the programme and it will also be required to help out homeowners facing foreclosures if it buys their mortgages.

Politicians also moved to make sure corporations do not benefit at the taxpayers’ expense. They insisted on curtailing so-called golden parachutes — compensation packages for departing executives at firms that sell assets to the government.

The government will also take a stake in companies that sell assets to the Treasury to ensure taxpayers share in any profits. If in five years the bailout has cost taxpayers money, the president will tax Wall Street to cover those costs.

A number of changes were also introduced to protect taxpayers, make sure that the public gains more from the bailout and limit the cost of the plan. One of those new clauses raised the government’s guarantee on savings from $100,000 to $250,000. There are also some tax breaks to help small businesses as well as an expansion of the child tax credit and help for the victims of the recent hurricanes.

The bill also came with some odd — and costly — amendments aimed at winning over reluctant politicians facing heat from local communities that will soon decide whether to vote them back into office.

Alaskan fishermen hit by the Exxon Valdez oil spill got $233m. Rum producers in Puerto Rico and the Virgin Islands have receied a $200m tax break. Nascar racing track builders, American Samoan corporations and low-budget film makers also received millions in tax breaks. Politicians also scrapped a 30 cents tax on children’s wooden arrows.

This is the last big bill before November’s presidential election and seems stuffed full of special-interest additions in order to secure votes. The favours — known as “pork” in Washington — added a whopping $152 billion to the $700 billion package.

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