House votes down $700 billion bailout

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WASHINGTON --- The economy has endured hurricanes, soaring fuel and food prices, falling home values and a growing credit crisis. Can it now survive Congress?

The House's stunning defeat of a $700 billion package urgently championed by President Bush, sent shock waves through Capitol Hill, the trading floors on Wall Street and the Oval Office on Monday.

"An economic 9-11," warned Terry Connelly, dean of Golden Gate University's Ageno School of Business, of the potential fallout. As the package went down, panicked investors caused the Dow Jones industrials to nosedive nearly 780 points in their largest one-day point drop ever.

Lawmakers defeated the bill by a 228-205 vote, but Democratic and Republicans leaders and Treasury Secretary Henry Paulson pledged to keep working for a deal acceptable to all sides.

In the meantime, the economic wreckage that the administration and Congress have warned about -- rising unemployment, shrinking nest eggs and prolonged recession -- might not happen immediately, but that doesn't mean it won't.

"This is like the advice you get from the doctor who says you should quit smoking," said Robert Brusca, chief economist at Fact and Opinion Economics in New York. "You know he's right. But if you don't, you're not going to die tomorrow and you're not going to die next week. But at some time, it's probably going to get you."

For now, Treasury was expected to work with other government agencies, including the Federal Reserve and the Federal Deposit Insurance Corp., to deal with problems on a case-by-case basis.

There are some steps the Federal Reserve can take to cushion damage from the worst credit crisis since the Great Depression.

The Fed, which has been providing billions in short-term loans to help banks overcome credit stresses, could keep expanding those loans in an effort to spur financial institutions to lend more freely again. And, it could keep working with other central banks to inject billions into troubled financial markets overseas.

Also, the Fed could make it easier for banks and investment firms to draw emergency loans from the central bank by expanding the type of collateral they pledge to back those loans.

And, if the credit crisis were to turn even worse, the Fed also has the power in extreme circumstances to expand emergency lending to other types of companies and even to individuals if they are unable to secure adequate credit from other banking institutions.

The Fed also could do an about-face and start cutting its key interest rate again. The Fed in June halted an aggressive rate-cutting campaign and has kept its key rate since at 2 percent.

While some Fed officials doubt that another rate reduction would do much to persuade banks to begin lending again, Brian Bethune, economist at Global Insight, insists a deep cut would pack a powerful punch. It would lower the prime lending rate, now at 5 percent, that serves as a benchmark for credit card rates and many other types of loans.

Even if the bailout were enacted by Congress and actually worked, many predicted the economy will probably shrink in the final quarter of this year and in the first quarter of next year, meeting the definition of a recession. If Congress doesn't act, analysts, who were downgrading their economic forecasts, believe those contractions will be deeper.

The unemployment rate -- now at a five-year high of 6.1 percent -- is expected to hit 7 or 7.5 percent by late 2009, which would be the highest since after the 1990-91 recession. Some economists say the rate could rise even more.

More banks could fail, too. In the second quarter that ended in June, the Federal Deposit Insurance Corp. estimated 117 banks and thrifts were in trouble, the most since 2003. The threat of more banks failing forced the government to act swiftly.

The bailout plan was intended to revive banks on Wall Street and Main Street by buying billions of their worst mortgage-related assets so that lending, the oxygen of the American economy, would flow freely again.

"People are going to go home and look at their 401(k)'s and not be very happy, and these are not just people from New York, but Iowa and everywhere else. This bill is meant for everyone -- not just Wall Street but Main Street," said New York Stock Exchange floor trader Theodore Weisberg.

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marandan
24
Points
marandan 09/30/08 - 09:18 am
0
0
sigraci, if you got extra

sigraci, if you got extra money, why dont you send it to the Dems leadership and see if they give it to those in need. If they want to help, let them put All their money in it first. They dont care about it enough to put up their money, why should I?

sjgraci
2
Points
sjgraci 09/30/08 - 09:20 am
0
0
BIPARTISAN means BOTH sides

BIPARTISAN means BOTH sides passing this bill with a majority (i.e. 50%+ 1) of their votes. The Dems voted 2/3s for and the Reps 2/3s against. The Dems held up their part of the deal to save the country from financial ruin while the CONS once again failed.

justthefacts
22761
Points
justthefacts 09/30/08 - 09:22 am
0
0
It will pass when all the

It will pass when all the special interest junk loaded in by the Democrats gets removed.

marandan
24
Points
marandan 09/30/08 - 09:22 am
0
0
Yeah reader, But the

Yeah reader, But the difference is, the DEMS think they can mislead ALL the people ALL the time, but they cant. It is so beautiful to see the DEMS squirming when they can't force people against their will.

sjgraci
2
Points
sjgraci 09/30/08 - 09:23 am
0
0
I've got money and will be

I've got money and will be fine. It's apparent you don't and don't understand it.

reader54
267
Points
reader54 09/30/08 - 09:30 am
0
0
Marandan, chill out ! It's

Marandan, chill out ! It's BOTH PARTIES blame!!They are all self-serving and only answer to the lobbyist.

marandan
24
Points
marandan 09/30/08 - 09:57 am
0
0
Reader54, Really, How can you

Reader54, Really, How can you try to blame both sides? You are acting like Barney Frank, he was the biggest obstruction to this whole fiasco. The only reason it is not still running is the DEMS leadership decided to use this political stunt to make the economy look as bad as possible, but the problem with this little scheme is, the dems will be exposed when it is all settled. Did this problem happen overnight? NO. The DEMS who were in charge of this entitlement program, never said a word, for years. I guess we should NOT put Dems in charge of anything financial, they are either incompitent or they are crooked, you pick.

marandan
24
Points
marandan 09/30/08 - 10:30 am
0
0
Who do subprime loans help?

Who do subprime loans help? Why did Slick willy pass the bill that allowed this kind of lending to happen. TO GET THE VOTES of the DOWNTRODDEN. The old adage comes to mind: To whom much is given(A house you can't afford), must is required(Your VOTE for THE DEM ticket). How is that fair? DEMS started this problem and protected it from oversight, so I BLAME THE DEMS. I hope everyone sees how giving away anything without proper qualifying is a bad bet, and should not be allowed. Forcing a level playing field, will only hurt our whole economy. The capitalism system allows anyone who does the right things, to be more successful than the others who are not doing all they can. Home ownership takes time and planning. Everyone can't have everything, so quit trying to force it. This is AMERICA, land of the FREE. (Free OPPORTUNITY to be successful)

reader54
267
Points
reader54 09/30/08 - 10:31 am
0
0
Marandan, What were the

Marandan, What were the economic state of affairs in 2000?What are they now? Who's been in office the last 8 years?DUH !The GOP had the majority in the House and Senate for 6 of those yrs. Still,neither really care about you .Only their power.

marandan
24
Points
marandan 09/30/08 - 10:39 am
0
0
So why should we foot the

So why should we foot the bill? Let em fail. Then people can really feel the crunch when the haves dont want to pay for the have NOTS. IT IS OLD, and WE are tired of footing the bill for things that dont work. This is just a small taste of the chaos,of if OBAMA takes over. You dems dont get it, what if all the reps just quit working, and employing others, what do you think would happen? You cannot force socialism. I would rather DIE than give away one PENNY to OBAMA's socialist ideaology.

shivas
2
Points
shivas 09/30/08 - 10:43 am
0
0
Justfacts, I don't envy you

Justfacts, I don't envy you and the travel. I gave that job up right before the birth of my first child. 7 years was enough for me, but I do miss the trips to Vegas.

LaTwon
1
Points
LaTwon 09/30/08 - 10:54 am
0
0
marandan in the video i

marandan in the video i posted slick willy tried to get more oversight, at least he claims he did, and was blocked by the other dems............... the truth shall set u free.

vote them all out

a different drum
26
Points
a different drum 09/30/08 - 11:52 am
0
0
I think the American dream is

I think the American dream is FREEDOM -- many people think it is money. I want my grandchildren and great grandchildren to be free and not have to pay for this debt that they had nothing to do with.

a different drum
26
Points
a different drum 09/30/08 - 11:56 am
0
0
They say oil prices may drop

They say oil prices may drop to $25.00 -- that would be good. The Dow is up 290 points at the moment. Leave the free market alone and let it do it's job.

a different drum
26
Points
a different drum 09/30/08 - 12:02 pm
0
0
Bush and the democrats have

Bush and the democrats have created lot of fear with all this talk of doom. I would think the market would be at zero. People know the stock market has value -- it is only going to drop until it gets to a fair price if left alone. The housing market could bottom, but at some point people will start buying houses. Personally I think a house should be looked at as a place to live and not necessary an investment. People with a little money could make out real good because of all the fear.

steve-o
0
Points
steve-o 09/30/08 - 12:06 pm
0
0
No where in our constitution

No where in our constitution does it grant the federal government the authority to bail out private companies- NOWHERE! As far as I am concerned, any bailout is ILLEGAL! Any congressman, Senator, or Yes, even George W. bush who attempts to use taxpayer money to bail out anyone should be tried for treason and shot.

marandan
24
Points
marandan 09/30/08 - 12:08 pm
0
0
Yes BTurner, a house is a

Yes BTurner, a house is a tangible item and has value. If they sent me the title to a house, then I would find a way to make sure the mortgage got paid, but, I will not agree to pay for a ficticious figure. I want collateral, which is what the lenders should have asked for before loaning anyone a Dollar.

a different drum
26
Points
a different drum 09/30/08 - 12:14 pm
0
0
This is the last line of the

This is the last line of the Declaration of Independence it shows the mind set of our founding fathers: "And for the support of this Declaration, with a firm reliance on the protection of Divine Providence, we mutually pledge to each other our Lives, our Fortunes, and our sacred Honor." It was this determination of the people that made this country great.

a different drum
26
Points
a different drum 09/30/08 - 12:17 pm
0
0
Marandan -- I agree with you.

Marandan -- I agree with you. There appears to be too many house and in a free market that usually means the value drops. You don't loose money unless you sell it -- a place to live will always have a value.

a different drum
26
Points
a different drum 09/30/08 - 12:18 pm
0
0
People don't loose money in

People don't loose money in the stock market until they sell the stock.

a different drum
26
Points
a different drum 09/30/08 - 12:20 pm
0
0
I am watching TV -- there is

I am watching TV -- there is a big push to pass this bill -- they probably will eventually. We will just have to wait and see.

steve-o
0
Points
steve-o 09/30/08 - 12:26 pm
0
0
I don't care if there's a

I don't care if there's a depression, I don't care if we have to eat at souplines, I don't care if people die, It is NOT the role of the government to bail out companies. Screw em!

a different drum
26
Points
a different drum 09/30/08 - 12:27 pm
0
0
Barney Frank has a lot to do

Barney Frank has a lot to do with this problem. It was the Democrats plan to put poor people into houses that caused these problems. They say it is discrimination for banks to loan to people based on their ability to pay it back. This is delusional thinking in my opinion and these same people are trying to solve the problem they created.

marandan
24
Points
marandan 09/30/08 - 12:48 pm
0
0
Amen, BT

Amen, BT

Bizarro
13
Points
Bizarro 09/30/08 - 12:56 pm
0
0
What a minute! Doesn't Obama

What a minute! Doesn't Obama believe in a bottom up economy and trickle down economics doesn't work. Why would he want to bail out the fat cats and not follow his own economic policy? Then why bail them out only to increase their burden by increasing their taxes and likely failure? No logic to Obama is there. Obviously he realizes that it does trickle down to mainstreet eh. I can't wait for Congressional hearings which will expose Dodd and Franks hand in creating this mess.

marandan
24
Points
marandan 09/30/08 - 01:22 pm
0
0
Yeah Bizzaro, and I vote that

Yeah Bizzaro, and I vote that they publicly execute them for knowingly causing a financial failure. Then I will be happy to pay my share. And no that justice has been served.

marandan
24
Points
marandan 09/30/08 - 01:30 pm
0
0
KNOW not no

KNOW not no

ITDoc
1
Points
ITDoc 09/30/08 - 01:37 pm
0
0
The only way to fix our

The only way to fix our financial system is to allow it to collapse. Throwing our tax dollars at this problem is asinine. All markets are over valued. A financial crash will mean those with BAD CREDIT will suffer greatly. Good. There are two entire generations in our nation who have never learned that failure is a possibility that must be considered before decisions are made. Too many worthless people getting too many loans they never intended to repay. Throw them in the streets. I have NO PITY or COMPASSION for those who jumped into debt they couldn't repay. If they couldn't read or understand the terms, shame on them for signing anyway. No one forced anyone to sign the forms.

marandan
24
Points
marandan 09/30/08 - 01:41 pm
0
0
amen amen amen, the

amen amen amen, the revolution is near.

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