Remember way back this morning when all those "leaders" of both parties in Washington had worked out a bailout deal. Well, never mind:
WASHINGTON — The House on Monday defeated a $700 billion emergency rescue for the nation’s financial system, ignoring urgent warnings from President Bush and congressional leaders of both parties that the economy could nosedive into recession without it. Stocks plummeted on Wall Street even before the 228-205 vote to reject the bill was announced on the House floor.
Bush and a host of leading congressional figures had implored the lawmakers to pass the legislation despite howls of protest from their constituents back home. Despite pressure from supporters, not enough members were willing to take the political risk just five weeks before an election.
Ample no votes came from both the Democratic and Republican sides of the aisle. More than two-thirds of Republicans and 40 percent of Democrats opposed the bill.
But just in case you’re now thinking that politicians are a bunch of jumpy, lily-livered cowards who can’t be relied upon to be cool in a crisis, take a look at what’s happening on Wall Street:
NEW YORK — Fear swept across the financial markets Monday, sending the Dow Jones industrials down as much as 705 points, after the government’s financial bailout package failed to survive a vote in the House.
As the vote was shown on TV, stocks plunged and investors fled to the safety of the credit markets, worrying that the financial system would now keep sinking under the weight of failed mortgage debt.
"Clearly something needs to be done, and the market dropping 400 points in 10 minutes is telling you that," said Chris Johnson president of Johnson Research Group. "This isn’t a market for the timid."
While investors had some worries that the vote would be close, many on Wall Street appeared to believe it would ultimately pass. The proposal wasn’t been seen on the Street as a panacea for the deepening problems in the financial sector that have led to the failure of Lehman Brothers Holdings Inc. and Washington Mutual Inc. and the forced sale of Merrill Lynch & Co. and Wachovia Corp. – and that still pose a threat to many other banks.
The markets turned highly volatile as it became clear the measure wouldn’t find the necessary support. The Dow regained ground then fell back again, trading down 524.88, or 4.71 percent, to 10,618.25. At its low, it was down 705.06, not far from its previous record for an intraday drop, 721.56, set during the first trading day after the Sept. 11, 2001, terror attacks. Still, in percentage terms, the decline remained well below the more than 20 percent drops seen on Black Monday of October 1987 and the Depression.
Broader stock indicators also tumbled. The Standard & Poor’s 500 index declined 74.52, or 6.14 percent, to 1,138.75, and the Nasdaq composite index fell 139.00, or 6.37 percent, to 2,204.34.
The Federal Reserve declined to comment on the market’s decline.
With Wall Street in turmoil, the yield on the 3-month Treasury bill fell to 0.32 percent from 0.87 percent on Friday. That showed that investors were prepared to get meager returns on an investment as long as it was secure. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.69 percent from 3.84 percent late Thursday.
Investors also faced other worries about the banking system. Wachovia became the latest big bank to be rescued from its overwhelming bad mortgage debt, agreeing to a Federal Deposit Insurance Corp.-brokered buyout of its banking operations by Citigroup Inc.
Marc Pado, U.S. market strategist at Cantor Fitzgerald, said investors are worried about the spread of troubles beyond banks in the U.S. to Europe and other markets.
"Things are dying and breaking apart while they sit there and vote on this thing," he said.
So nice going all around, fellas. Ya bunch of feckless twits…
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Remind me – what did John McCain do to reach across the aisle and use his leadership skills to get this done?
Congreesman Dick Armey released a statement that captures the correct view of the bailout:
“Indeed, many proponents of the bailout have tried to put the blame for this massive government intervention squarely on the market, asserting that free market capitalism has somehow failed and the only solution is more government intervention. Yet markets do not operate in a vacuum. In fact, government institutions can have a strong — and too often corrupting — influence on markets. In the specific predicament financial markets face today, there is a long history of government actions that have led to what is most accurately described as a government, not market, failure.
Some point to “unbridled greed” as the root cause of the crisis. There are plenty of bad actors to point to, but self-interest is in the very nature of human action, a constant that cannot provide an accurate explanation of the extraordinary distortions in the housing and financial markets. Self interest does indeed drive private economic behavior and the invisible hand of the market, but it equally drives so-called “public” political action. A more serious examination of the current financial meltdown suggests government excesses, not unbridled markets, played a determinant role in today’s market meltdown.”
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I repeat – the best action in this case is for the government to do nothing. Let the market sort it out.
The best steps the government could take now would be to cut taxes AND cut government spending by 10%. They could do that a whole lot easier than trying to rig the market to reward lobbyists and donors.
Sorta makes you wish Ron Paul was on the ballot, doesn’t it. He was treated like a pariah by his own party six months ago when he talked about the instability of the financial system. History will prove him to be exactly right.
Help us John McCain! Help us!
And the first thing the McCain does after the bailot bill fails? A press release blaming Obama and Pelosi…
This is leadership? This is a maverick? This is a guy who is going to clean up Washington?
Nope, this is just a sad joke. An old man whose political demise will make Bob Dole’s ride off into the sunset look like a pleasure cruise.
No, it doesn’t make me wish Ron Paul was on the ballot. I realize it makes YOU with Ron Paul was on the ballot, but the sun coming up in the morning makes YOU want Ron Paul to be on the ballot.
It’s rather hard to imagine a scenario that would make me want that…
Actually, Brad, I would have voted for Romney as well… Think he would have pulled the same stunts McCain has during the past few weeks? I think not. I probably would have voted for Huckabee also as he supports the Fair Tax.
John McCain? Never. Obama? Never.
One’s gone too far in life and the other hasn’t gone far enough.
For one brief shining moment, it looked like the banking capital of the U.S. might shift to Charlotte with the Bank of America takeover of WaMu. Not! Now that Citigroup is gobbling up Wachovia, Charlotte’s day in the sun is over (at least temporarily).
There are several reasons it was voted down, according to Congressmen who voted against it.
1. Secrecy.
Pelosi only gave up a copy of the bill minutes before the vote.
2. Railroading.
Only 3 Republican members were allowed into the room to negotiate, and they couldn’t take anything out but some hand notes. That would not sell the deal.
3. Coverup.
Democrats wanted a quick fix before the election, with no hearings, because the root cause of this debacle was the creation of nothing-down NINJA loans for minorities who were not creditworthy.
During the Clinton administration, these “subprime loans” expanded from 2% of all mortgages to 20%. Barney Frank, John Spratt and Pelosi defeated 18 attempts to tighten controls and bring outside oversight.
4. Kickbacks.
Hundreds of political pie jobs were created for cronies like Jamie Gorelick, who went from making $116,000 at DOJ to making $577,000 at FM, with a $700,000 annual bonus. Then these people would “donate” the maximum back to Barney Frank, Nancy Pelosi, Spratt, Chris Dodd, etc.
5. Other bailouts.
The mortgage mess only required about $35 BILLION in insurance guarantees, not cash, to stabilize things. The other $600 BILLION came from Democrats trying to slip in bailouts into the future for union pensions and state and local government worker pensions.