Bailout Bill Fails House Vote
 

The House just rejected the bailout plan, Dow's down almost 700 points, 400 of it in the last 5 minutes.

Lovely.

Vote was 205-228 with 95 Democrats and 133 Republicans voting "Nay"

The voting hasn't closed yet (2:10 EDT), so there is still a chance that it can pass if 11 representatives change from no to yes. Which is not to say that will happen, but it's still a possibility.

I'm watching on CSPAN, they closed voting 2 or 3 minutes ago and no motion to reconsider was brought.

They're voting on an amendment to the Small Business Act now.

can we maybe merge this with the "Really" thread about the financial madness?

Damn!

I'm not a real big fan of the bailout bill as it was brought to a vote, but that was an iffy decision by the House leadership. They said going in that they weren't sure if they had the votes and would need at least 100 members of the Republican caucus (which was unlikely to say the least) to pass it. It would have been better for the markets to postpone a vote and work on getting enough compromises in the bill for it to pass than it was to bring it to a vote where it was likely to fail, let the markets take that hit and then have to try to work out more compromises and bring it to a vote again anyways.

It'll be interesting indeed to see what happens next.

Good for them! I think we all want some accountability with all of this mess, and I feel like these congressmen (and possibly women)are demanding that Washington be accountable to the people by not jumping in with a huge amount of money. I wish they had postponed it or not voted at all if they didn't have the numbers to pass it through. Bye bye, DOW!

I agree... I think it sucks that the Dow went through the floor, but this isn't a new problem. Maybe it would have helped for them to start looking for solutions 9 months ago when the problem wasn't quite so severe and urgent. I don't think it's right for them to just throw money at it with no accountability whatsoever and just hope everything works out.

People, people, people...we cannot allow AIG to go under. I don't think people get how serious this is. It isn't just a matter of saying, "Sucks to be them. They shouldn't have loaned people the money to buy big houses if they couldn't afford it. Let them die!" If AIG fails, so will a number of banks and lenders that AIG insures. And then NONE of the banks will have the money to conduct their business. FDIC will have NO meaning, because there won't be enough money to cover the losses. That's YOUR money that will be GONE. One day you may go to use your debit card and find that your bank will not allow you to withdraw any funds...because whoops, it doesn't have your money anymore...it's now at another bank, covering its debts.

Not to mention that the credit market is frozen so there is no credit going out.. want to buy a house? Oh well. Want to sell a house? As if it weren't hard enough already? Sorry, your buyers can't get a loan because there is no money to loan. New car? Hope you have $24,000 in cash to pay for it because there is no money to loan.

Idiotic move by the House.

Pelosi's partisan bickering must be held accountable for when elections come around.

I'm not saying "Let AIG and everyone else fail".. what I'm saying is that this has been a long time coming. The government in general has had plenty of time to write and consider something like this so that it is done right and they aren't just throwing money at a problem with no idea of what it will specifically go to or how to make sure the investment they are making will work. Now people are all upset that the bill didn't pass b/c there are some who want to make sure it's done correctly and that it will work.

I know that it's something that will need to be done either way.. I just don't see why a lot of people are freaking out that there are other people who want to make sure it's done right and the money is used for the right things.

In my line of work, I have to deal with buyers. Let's say they got too heavy in inventory because the sales didn't come like they thought they would. So they ask us for some help in the form of money to help stimulate sales (usually in the form of markdowns). If we send them a check for markdowns, we expect certain things to happen - like we expect them to drop the retail so that people may be more interested in purchasing the item at the lower cost. If that doesn't happen and the buyer just pockets the check to his/her bottom line, the retail stays the same, they continue to sit on the inventory and the problem still exists.

How does that compare to lending money to people that can not afford to pay it back?

It's not just cars and homes. In the business world, companies use credit to purchase capital machinery, buy inventory, invest in research and development, etc. The credit crisis is going to effect us all. Don't think you will be immune.

In the last 3 days 5 banks worldwide have failed. The panic is GLOBAL, and something must be done to help shore up confidence. European countries have been stepping in and injecting money into their banking system. The US, the largest economy, unfortunately is going to have to as well.

Small example:

My company sells capital machinery in the chemical and plastics industry. The companies that buy from us use credit to buy the machines (most companies don't have $100,000 laying around not being used). With banks not lending money, few capital expenditures will be made. My company will go under; I, and my co-employees will lose our jobs. The companies we represent will be unable to sell their product, they will go under, hundreds will lose their jobs.

This is not just a "bail out" of Wall Street fat cats, this is a problem for us all. It's just a matter of time when you, your family, your neighbors will be hit. I wish so much it weren't so, but it is and we'll be paying for it for a long time, one way or another.

This has been a long time coming. There have been warning signs for years, and our government (and we) have kept our heads in the sand, writing checks that we couldn't afford to cash.

I thought the AIG deal already went through separately.

And can you take me through how you get from AIG to FDIC failing completely?

ETA: This link is a little old considering what's happened between then and now, but it explains how the FDIC would meet it's obligations even if more banks did fail. http://biz.yahoo.com/ap/080916/bank_...ts_safety.html

I'm certainly not feeling good about things, but a real doomsday scenario seems a little further off than your post implies.

FDIC insures bank deposits in the event that a bank fails, like AIG, WaMu, etc... its the govt. basically protecting you in case your bank can't pay you your money. Well, with all these banks going under, it is putting more strain on the FDIC to insure all deposits, etc... Essentially, this is another way AIG's collapse directly effects the government, and therefor you... Secondly, AIG, WaMu, etc are not just small time banks, oh no, these are the banks that have given loans to other banks, etc...

Right, the FDIC is likely to experience more strain, but I don't think it's in any danger of failing to meet its obligation because it has other resources at its disposal if it needs them, like you and me and our tax dollars.

I have no doubt that we're all going to be affected, but I don't think that we need to worry about our FDIC insured funds particularly.

That is a stretch, the FDIC is ultimately funded by the US government. (crossposted with UGAalum)

AIG has already been propped up by the government. The failure of AIG, being a global insurer, would have had worldwide implications. That is why the G7 pressured the US government into the bailout.

The government tried to stop the bleeding by capriciously bailing out some and letting others fail, but the hemoraghing continues, and this big $700 billion bailout (although the negotiated bill was better than the first draft), may or may not be the cure (or 1st step to a cure). BUT, it will get the bad debt off the books of lending institutions, thus freeing up dollars to lend as loans.

There will be more oversight, it will be harder to qualify, but at least there will be money in the market (and not in people's mattresses) to loan.

I know we're in a very different situation in Michigan than in most parts of the country, but the people that I know personally who have foreclosed on their mortgages *could* pay it back at the time that they obtained the mortgages. Some lost jobs, one lost her husband (and therefore, his income), etc. On my street, more of the people who are walking away from their homes are either unemployed or they have to move and cannot sell their house for what they owe on it, so they're walking away from it. If you bought your house for $180K and financed $140K and had a family income of $100K, that wasn't an irresponsible buy. The problem is that now the family income is $30K and the house is only worth $120K so they're screwed. I don't know anybody who was foolish enough to do the interest only loans or other crazy loans that were being offered, personally. I'd be very curious to see that breakdown with foreclosures... the "why" of it all. What percentage is due to unemployment, what percentage is due to bad loans, etc.

I own a home furnishings store. Now that people can't buy/sell their homes and many are facing foreclosure they aren't purchasing home decor items. Sales are off 55% from this time last year and I can't recall ever having seen business this bad. Now, if we do experience a credit crunch I won't be able to meet payroll within months. I could loose my business because of the free wheeling dealers on Wall Street and the mess they have created. Where is my bailout? Seriously! I understand the logic behind supporting our financial markets, but the reality is that it is the small business owners that are suffering and barely meeting their monthly obligations. The nations largest Chevy dealership closed it's doors last week, and I feel like that is just the first of many retail closures to come. Right now my financial life is at risk on so many fronts....retirement savings, stocks, my income, my insurance.....I'm pretty much hating our congress right now and hoping that the FBI prosecutes as many Wall Streeters as possible..:mad:

Man, I was up till 4 in the morning to watch the vote and see what move can make to protect mine and my client's money. Soon as the vote was in, I immediately shorted on Dow Jones future and went long on Gold. It was still a nasty fall, but I was able to recover some of the lost. Oh well, today I'm being hammered in the Asian market.

Crazy days ahead.

Good time to start looking for cheap stocks for the long term.

Thank you Democrats.

The Democrats accidentally did the right thing and the Republicans intentionally did the wrong thing, all for political reasons. My mind is bottled right now.

A good and understandable explanation of the problem.

and another talking about the consequences of a credit crunch

srmom, those were good quotes and interesting to read/think about

I feel very sorry for small business owners who are caught in the middle of this mess! My husband and I were talking this morning and I think the predatory lending/mortgage crisis was just the beginning of our economy's downward spiral. I understand both sides.

I was watching the Today show this morning and they mentioned how difficult it will be to get credit in the future not to mention credit lines could be decreased to minimize liability.

This whole thing should be a reality check for people who have always lived above their means and buy crap they don't need!

I am so glad the bailout didn't pass!

This was the first during the Bush administation that Congress finally did something right, but then again even a broken clock is right twice a day.

America will experience a significant depression, bailout or not, but a bailout can make a difference between the depression for three years (without a bailout) and three decades (with a bailout). Just let it go, let the market correct itself, and everything will come out in the wash.

Thank you Congress, especially to my own Congressman Pat Tiberi who voted against the bailout.

This is specious reasoning at best.

Some of the bailout plans will actually pay for themselves over time, and by giving the market a firm bottom backed by the (still) highest-rated credit risk in the world, both the short-term and long-term viability can be ensured.

You're putting up a false dilemma - there are more options besides "this bailout plan" and "no bailout plan." Also, it's not "short term" or "long term" - it can be both.

Besides this, there really isn't this guarantee that the market will correct itself - while I wish there were, the current US economy is not exactly run by Adam Smith's Invisible Hand. In short, we've inbred many of the economic and production factors to the point where market forces may not, in fact, correct themselves - in which case, brief nationalization may be superior to lengthy failure and relying on other nations to resuscitate the US economy through outside investment.

I've not heard this reason given for contributing to the mortgage crunch, but it certainly seemed to contribute, in my view:

Once upon a time in America, your credit card interest was tax deductible. The Tax Reform Act of 1986 eliminated this option. This is, in large part, what led to people taking out home equity loans in mass quantities as their home values rose dramatically in the early to mid 90's. It was pushed as a smart financial decision.. use that home equity to pay off those credit cards and THEN your interest is tax deductible! This is where I've seen a lot of people get into trouble. You roll those credit card balances into a home equity loan or a new mortgage and KEEP USING THOSE CREDIT CARDS. Then your home value drops and BAM. You owe more on your house than you can pay and you have a boatload of credit card debt to boot. Most I know have worked their way out of it, but it's getting tougher and tougher now.

The Democrats saying that it had the support of both parties' leadership in the House and the Republicans needed to deliver their caucus was apparently untrue. Minority Leader John Boehner, Republican Whip Roy Blunt, Republican Conference Chair Adam Putnam, Republican Policy Committee Chair Thaddeus McCotter and Financial Services Ranking Member Spencer Bachus all voted "No" on the bill. Just wishing that the bill had bipartisan support from the House leadership doesn't make it so.

^^^ Hmmm. Untrue as in "a lie" or untrue as in "turned out not to be true"? Is it possible that the Democratic leadership was led to believe that it did have the support of the House Republican leadership?

The way I understand it is that the Republican leadership said that they needed to get something passed and that the Democrats had their support in passing a bailout bill. That may have been misunderstood as they needed to get this passed and would support it. I don't know exactly, but I do know Pelosi and Frank were raising hell about how Boehner didn't deliver the Republican conference. Umm, no kidding, he didn't vote for it himself either.

Did y'all see this?

http://www.washtimes.com/news/2008/o...-spouses-firm/

All these people are crooks and liars!!

Fixed the link:

http://www.washingtontimes.com/news/...-spouses-firm/

Why do I have a flashback to Capt. Renault in Casablanca:

I'm shocked, shocked to find that gambling is going on in here!

Thanks for fixing the link.

I cannot stand it when I read about someone's complete and utter hypocracy. Then, when they are shown as the bald faced liars that they are, they come up with reasons why they should be above the rules.

So true about the Casablanca reference though. I shouldn't be surprised!

Is anyone distubed how this "emergency bailout bill" keeps having other b.s. added to it?

http://www.politico.com/news/stories/1008/14161.html

Yep, I am. Let's throw everything but the kitchen sink into the bill. I didn't look at your link, but I heard on CBS radio tonight that the original bill from Bernanke was 2 pages, the one the House voted down was 110 and the one the Senate was voting on tonight was something like 445! Sheesh!

There are two things you should never see being made:

1) Sausage; and
2) Legislation.

I'm sure both processes are completely terrifying.