Update 3, 9:45pm ET: CNN reports that the Senate version of the bailout bill passed, 74-25. Click here to See how each senator voted.

UPDATE: The Senate bailout bill is here:

H.R. 1424 – Emergency Economic Stabilization Act of 2008

Original post…

After a stunning failure in the House on Monday, Congress will resume action on the $700 billion bailout for the nation’s troubled financial systems on Wednesday.

The Senate has scheduled two votes on the bailout for 7:30 pm. The first vote will be on a slightly revised version of the bailout bill that was defeated by the House on Monday. The second vote will be on an amendment from Sen. Bernie Sanders (I-VT) to levy a 10 percent surtax on the income of individuals above $500,000 a year. Both votes will require 60 “aye” votes to pass. The main bailout vote will require 60 “aye” votes to pass, while the Sanders amendment will be voted on by voice vote, which allows senators to vote against it without going on the record.

The version of the bailout bill that the Senate will consider adds an increase in the size of bank deposits that the FDIC is authorized to insure. Echoing endorsements by both Barack Obama (D-IL) and John McCain (R-AZ) on Tuesday, the bill would raise the FDIC’s insurance limit from $100,000 to $250,000.

“While [the $100,000] guarantee is more than adequate for most families, it is insufficient for many small businesses that maintain bank accounts to meet their payroll, buy their supplies, and invest in expanding and creating jobs," Obama said on Tuesday. He added, “the current insurance limit of $100,000 was set 28 years ago and has not been adjusted for inflation.” The FDIC is funded by the banking industry, so taxpayers would only feel the impact of the provision through the possibility that banks could have less money available to offer as loans.

The bailout is going to be considered as a substitute amendment to a mental health parity bill that Democrats in Congress havr\e been working to pass for the past few years. But the bailout amendment will include the mental health parity bill within it, so if the amendment passes, the mental health bill will tag along on the legislative ride and, pending approval by the House and President, eventually be signed into law. The bill would mandate that any mental health coverage provided by an insurer cannot be more restrictive, in any way, than the treatment they provides for medical and surgical benefits.

Also included in the bailout amendment will be a package of tax extenders that Congress has been working to pass. The tax extensions include a renewable energy and conservation tax credit bill, tax relief for disaster victims, a one-year patch of the alternative minimum tax, and more. Again, if the bailout passes, the tax extenders pass as well.

Including the alternative minimum tax patch is supposed to give the bill more Main St. appeal. If Congress doesn’t pass an ATM patch, it could increase taxes on about 20 million middle-to-upper class Americans next year. “Adding this tax relief will ensure that regular working Americans get the financial help they need in this time of crisis,” Max Baucus (D-MT), the chairman of the Senate Committee on Finance, said in a statement on Tuesday. And since the ATM patch is basically a big tax cut, Republicans like it as well.

Senator Chuck Schumer (D-NY) likes the addition of the tax extenders bill as well. “This is a brilliant move by Harry, and I believe it will help pick up votes on both sides of the aisle,” he said

But has the public changed their minds about this? The underlying financial systems bailout is essentially the same as the one that was killed by the House. It would still put massive amounts of taxpayer money at risk, and it still does nothing to help those struggling with foreclosures and unemployment. The public outcry against bailing out Wall Street without doing anything to help Main St. has been unprecedentedly huge, and I’m guessing it will continue that way throughout the day Wednesday.

Still, only a third of the Senate is up for re-election in November, so senators may be more willing to vote for an unpopular bill like this if it improves their standing in the eyes of the leadership that supports it. Plus, the unpopular bailout bill is being combined with two bills that have huge targeted appeal to senators on both sides of the aisle.

Obama and McCain will both be back in the Senate tomorrow pushing their colleagues to vote for the bill, and reports are suggesting that it’s going to pass. I’ll be watching and updating as things develop.

UPDATE 2: Both parties in the Senate are confident at this point that the bailout will pass tonight.

So, looking ahead and assuming the Senate is successful, the bailout bill, H.R. 1424, will bounce back to the House for a vote on Friday. House consideration will be on the same bill the Senate is voting on tonight. Pending any amendments the House may try to add, the House’s vote on Friday will essentially be on a motion to concur to the Senate amendment (a.k.a. the bailout) to H.R. 1424.

The big question remaining that will determine whether or not the bailout becomes law is what happens in the House on Friday. Like in the Senate, the addition of the alternative minimum tax patch will help attract Republican support. But it could cause some fiscally-conservative Blue Dog Democrats to balk.

Some Blue Dogs are opposing the addition of the AMT patch because there is no mechanism in the bill to pay for it. The last time the House voted on an unpaid for AMT patch, 30 Blue Dogs voted against it, including Majority Leader Steny Hoyer (D-MD).

Hoyer, for example, voted in favor of the bailout on Monday. Losing votes like his for the Friday vote in the House could mean that the bailout gets rejected once again.

Overall, an additional 12 “aye” votes above Monday’s vote will be needed for the House to pass the bill Friday and send it to President Bush for his signature.

Update 3, 9:45pm ET: CNN reports that the Senate version of the bailout bill passed, 74-25. We will update this post with a link to the Senate roll call as soon as it becomes available tonight - - until then, Politico has the list of Senators who voted “no”.