Dow drops as bailout defeated
RAW STORY
Published: Monday September 29, 2008

The House failed to pass a $700 billion economic bailout package Monday, sending lawmakers back to the drawing table to try to stave off an economic collapse, and the stock market plummeted on the news.

The package failed on a 228-205 vote after Congressional leaders held the vote open for a half-hour after time had expired as they tried to persuade lawmakers to change their votes. CNN reported that lawmakers wouldn't hold another vote on the bailout Monday as Congress prepared to adjourn for the Jewish holiday of Rosh Hashanah, which begins at sundown.

The failure -- after lawmakers remained in Washington over the weekend to negotiate a compromise -- essentially sends Congress and the White House back to the drawing table as they try to craft a compromise.

The Dow Jones Industrial Average was down nearly 600 points as traders worried the vote would go down in defeat. The Dow dropped as much as 778 points at one point.

It was unclear how long Pelosi would hold the vote open to try to persuade lawmakers to shift their votes. House rules allow leaders to hold the vote open indefinitely.

Lawmakers on Monday debated the bailout plan for struggling Wall Street banks as US President George W. Bush appealed to Congress to quickly approve the deal to free up frozen credit markets.

"I fully understand that this will be a difficult vote," Bush said at the White House before the House of Representatives began debate on the proposal amid stiff opposition from some members of his Republican party.

But he said the rescue package "will help keep the crisis in our financial system from spreading throughout our economy."

The US president spoke after a compromise proposal was hammered out in high-stakes negotiations between rival party leaders in Congress and White House officials over the weekend before global markets reopened on Monday.

The plan would mark the largest government economic intervention since the Great Depression of the 1930s, and is designed to shore up a troubled economy suffering from a burst US housing bubble that has ravaged the global banking system.

The proposal grants the Treasury secretary authority to buy up toxic mortgage-related assets in troubled banks in hopes of easing the flow of credit and reviving the moribund housing market.

As the pivotal debate began in Congress, the shakeup of the US banking sector continued with Citigroup on Monday agreeing to takeover Wachovia Bank. US regulators backed the deal that grants the government a stake in one of the nation's biggest banks.

The takeover came as Wachovia faced a near collapse of its share price and weakening confidence because of its exposure to troubled mortgage assets.

Congressional leaders, mindful of the approaching November 4 general elections, acknowledged the vote could be close while some conservative Republicans and liberal Democrats vowed to oppose the measure.

"We now have a deal that promises to bring near-term stability to our financial turmoil, but at what price?" Republican Congressman Michael Pence, a critic of the bailout, asked in a letter to colleagues.

White House hopefuls Republican John McCain and his Democratic rival Barack Obama have offered cautious backing for the plan, both claiming that demands they had made had been included in the new bill.

Despite the weekend deal, the financial crisis spread anxiety across global markets, prompting nationalizations and rescues of European banks while sending stocks down in Asia and Europe.

Britain had to nationalize Bradford & Bingley bank, governments intervened to prop up Belgian-Dutch group Fortis and other European banks got sucked into the storm.

Federal Reserve chairman Ben Bernanke echoed Bush's appeal, voicing support for the bailout bill.

"This legislation should help to restore the flow of credit to households and businesses that is essential for economic growth and job creation, while at the same time affording strong and necessary protections for taxpayers," he said in a statement.

Democratic leaders portrayed the revised plan, that ran more than 100 pages, as much improved from the three-page version sent days earlier by the White House, saying it included stricter oversight, safeguards for taxpayers and caps on executive pay packages.

"Working in a bipartisan way, we sent a message to Wall Street. The party is over," said House Speaker Nancy Pelosi.

"The era of golden parachutes for high flying Wall Street operators is over. No longer will the US taxpayer bail out the recklessness of Wall Street."

The proposed rescue, posted on financialservices.house.gov and formally titled the Emergency Economic Stabilization Act of 2008, calls for the immediate release of 250 billion dollars to enable the government to buy up troubled assets.

Under the bill, the president is authorized to approve a further 100 billion dollars, but the plan gives Congress a veto power over purchases above that limit and sets a ceiling for all purchases of 700 billion dollars.

The rescue operation will be overseen by a board including the chairman of the Federal Reserve, the Treasury secretary and the chairman of the Securities and Exchange Commission.

The bill prohibits "golden parachutes" for CEOs or other executives who lose or leave their jobs at companies participating in the plan as long as the Treasury holds equity in those firms.

The negotiations were reportedly marked by bitter disagreement over how to pay for possible losses suffered by taxpayers after debt has been bought and sold.

Democratic lawmakers had called for financial firms to help pay for the losses but the draft legislation left the question open for the next US president to tackle.

The market is going to be a crazy place for a while.

Hard times might be upon us - OH MY... Lets get real... hard times were coming anyway.

*Houses being sold for several times what their ACTUAL worth is. (eventually it all comes to a point where someone holds a property that can never pay for itself)
*Business playing the stocks yet borrowing money to make payroll. (eek - recipie for disaster).
*Other business making plans that required them to expand faster than cash inflow would warrant to be prudent.. and so borrowing money to make payroll and day to day expenses. (what fools... did they not attend business schools).

Take a deep breath folks. It will all work itself out.

The market is roughly a sine wave. It should never have been forced as high as it went... It was allways assured to return to level at some point but must first absorb (in physics terms) the potential energy of the high point of the wave. That absorbing process means it needs to drop before it can level.

This all would have happened bailout or not.

Go now, while your dollar can still purchase something, get some do it yourself books,learn how to be independant.

I did that months ago. Been growing food in my basement since last winter.

Right after I saw a house down the street worth 42,000 get sold for 72,000 and immediatly turned and listed for 102,000.

I have a big garden and we started a lil neighborhood co-op...Works well..

I thought I heard John McCain suspended his campaign to get this done:

"This bill would not have been agreed to had it not been for John McCain... This is a bipartisan accomplishment, a bipartisan success. And if people want to get something done in Washington, they just watch John McCain. He's been the guy whose name is at the top of major pieces of legislation for a long time."
-- Mitt Romney, NBC's Today show, 9/29/08

"What Senator McCain was able to do was to help bring all of the parties to the table, including the House Republicans, whose votes were needed to pass this"
-- Steve Schmidt, NBC's Meet the Press, 9/28/08

"We're optimistic that Senator McCain will bring House Republicans on board without driving other parties away, resulting in a successful deal for the American taxpayer."
-- McCain spokeswoman Kimmie Lipscomb, 9/26/08

both McCain and Obama seem to not GET IT.

Neither of them appear to be in touch with reality.

I am tired of hearing about he did/no he did. I did/no I did first.

Neither of them has shown an ounce of Leadership since before the debates.

Just posturing and jawin bout stuff that WE ALL KNOW IS NOT GOING TO HAPPEN.

One of them went towards our captiol to rally repubs to support something that WE OBVIOUSLY did not want.

The other stumped the country talking about the need for something WE OBVIOUSLY did not want.

How can you give us change we need if you do not know what we want?

And McCain - you are right. Change is comming, Get on board or get run over.

Today's vote was mostly about gutless representatives on both sides putting their political careers ahead of the country. We may not like it, but if credit isn't loosened, we are all (most of us, anyway) screwed. A bill will be passed and it won't differ much from the one that went down today. Reps voting "nay" did so to be able to tell their constituents, "I voted against bailing out Wall Street."

On another note, Nancy Pelosi's partisan speech before the vote was just stupid. We're in a serious financial crisis and she's throwing mud... Sad.

Wow... I watched the thing on C-span. Most of the people I saw get up and say NO did so with conviction and in some cases restrained anger that they were even being asked to vote on such an outrageous thing.

I was for the first time in quite a while IMPRESSED with some of our lawmakers.

Well they certainly knew the camera's were rolling. That footage will be in their campaign ads tomorrow.

You bet...

when you do something right for a change ya gotta have bragging rights.

LMAO!!!! Typical political HACK talking points...that's the OBAMA campaign...in the nutshell.

Kinda like everything that comes out of your mouth..Bash the libs for everything..Theres plenty of blame for everyone.

The absolutely worst thing to do in this situation is panic.

I would rather our representatives think long and hard about who they're going to bail out and how than just giving away more money.

Think of it this way:

If you own a business and make bad business decisions and it goes under, would you expect the government to give you money?

Unfortunately, many people that had little or nothing to do with these bad decisions could be affected so I guess they're going to have to make some kind of deal.

If you were were reading everything you could on the issue, it wasn't even certain that it would actually help. Mostly, they were HOPING it would help.

But it also would go to show that America is for big business. Not for the people.

If it passed and didn't work, not only would we be where we are at this moment, but we would have that huge tax increase as well, to pay for the bail out.

I may be one of a minority, but I actually breathed a sigh of thankfulness when it failed.

Maybe we need to take this economic hit to wake up and realize the way we have been going these past couple of decades isn't working and was a path to disaster.

Maybe we need to learn to live within our means instead of on credit. Maybe we need to move away from a credit based economy.

Well, I looked outside after the vote...and discovered much to my amazement, and the news medias chagrin....the sky was not falling. To tell you how bad the economy was today: I manufacture atv/snowmachine trailer. Took orders for 8 today...most in the 9 year history of the company...and everyone paid cash. Yes it is going to get a little tight for all the idiots who live beyond their means, borrow money and use credit cards to pay the bills. Myself, everything I own is paid for, and if I do not have the cash money to pay for it, then I obviously do not need it. Just go ahead ppl...keep on spending more than you earn, or, take a lesson from the govt and the wall street folks and get a little bit of financial self control and maybe you won't end up like them. JMAO

I don't always agree with you, but I will agree on this one.

I say nay to all the Chicken Littles (including the President) that think we should throw money at the problem for a 'quick fix' that might only compound the problem and make it worse.

To all those vultures who preyed on first time homeowners and got them to sign their lives away in shady real estate deals and ARMs, I say to you:

I hope Hell has a special place reserved for you.

well, they signed on to the bailout today.

It has grow to over 400 pages.

pork and earmarks attached and other bills too.

what a mess.

The money changers are probably hyperventilating tonight. LOL They must be laughing their butts off at this.

As if......

I don't care how many free lunch programs obama starts, they will all fall the way of this current mess.

Who is going to bail that out?



"Watch out kids, you're gonnan get hit."

remember that tune? Most of you weren't born yet. LOL


KOOL AID isn't just for kids anymore.