Incredible. Even with voter feedback at 100 to 1 against (source), 141 Democrats and 65 Republicans still voted for the bailout.
The fate of a controversial $700 billion financial bailout plan was in doubt Monday as a House vote turned against it.
The next steps were not immediately clear but supporters were scrambling to put it up for another vote.
What was supposed to be a 15-minute vote stretched past the half-hour mark as leadership scrambled for support. Investors who had been counting on the rescue plan sent the Dow Jones industrial average down as much as 700 points while watching the measure come up short of the necessary support, before rebounding slightly. The key stock reading was down more than 500 points.
The measure needs 218 votes for passage. Democrats voted 141 to 94 in favor of the plan, while Republicans voted 65 to 133 against. That left the measure with 206 votes for and 227 against.
Of course, they only need to slip in enough random pork to convince 12 representatives to switch their vote, so I’m not too optimistic that the bill will remain dead for long.
Update:
Here’s how Washington State’s Representatives voted (district map):
YES:
- District 2 - Rick Larsen (D)
- District 3 - Brian Baird (D)
- District 6 - Norm Dicks (D)
- District 7 - Jim McDermott (D)
- District 9 - Adam Smith (D)
NO:
- District 1 - Jay Inslee (D)
- District 4 - Doc Hastings (R)
- District 5 - Cathy McMorris Rodgers (R)
- District 8 - Dave Reichert (R)
Jump to the bottom to add your comment. ↓
179 responses so far ↓
1
TJ_98370
// Sep 29, 2008 at 10:58 am
According to Calculated Risk, the bailout plan is failing the House vote. I can’t seem to verify that anywhere else.
2
John
// Sep 29, 2008 at 11:00 am
The bill didn’t pass! Who-hoo!
3
David McManus
// Sep 29, 2008 at 11:07 am
CNN verifies that it is failing. DOW down 450 and falling. Reelect anyone who voted to reject!
4
Jillayne Schlicke
// Sep 29, 2008 at 11:10 am
Final vote 205-228 the rescue bill fails!
http://www.c-span.org/Watch/C-SPAN_wm.aspx
5
matthew
// Sep 29, 2008 at 11:11 am
226 vote Nay 207 vote for in favor.
Kill Bill.
6
shane
// Sep 29, 2008 at 11:16 am
"golly" fine job everyone. Get ready for round two, these bastards won’t give up on all this money that easy.
Edit: Golly? Serious?
7
John
// Sep 29, 2008 at 11:21 am
I am so happy right now. The congress actually has a spine for once.
8
David McManus
// Sep 29, 2008 at 11:25 am
“Democrats voted 141 for, 94 against. Republicans voted 66 for, 132 against.”
9
Ray Pepper
// Sep 29, 2008 at 11:27 am
sniff sniff.. i smell blood!… GEMS reared their heads at 600 down…. AAPL at 102.00, RIMM at 60.00, FFIV, NTAP, 17.50 come on!
10
patient
// Sep 29, 2008 at 11:27 am
How can you keep Paulson and Bernanke after this bi-partisan vote of no confidence? The only way to keep any kind of face for the president is to put the blame for this fiasco squarely on Paulson and Bernanke. And how can we trust those two clowns to put their heart into their job after being shoot down by their own and the american people in front of the whole world?
11
Jillayne Schlicke
// Sep 29, 2008 at 11:31 am
white house spokesman says bush is very dissapointed….pres will be meeting with his team later in the day
12
Herman
// Sep 29, 2008 at 11:35 am
Don’t celebrate so soon. What’s gong to happen next is the Dems will structure an alternative “rescue” with a housing bailout for homeowners instead of wall street.
13
Jillayne Schlicke
// Sep 29, 2008 at 11:38 am
Here’s the roll call.
Jay Inslee voted No.
Adam Smith, Yes.
http://clerk.house.gov/evs/2008/roll674.xml
14
budbrad
// Sep 29, 2008 at 12:04 pm
People against this thing simple don’t understand credit markets.
The time to complain about free money was months/years ago. The time to act is now.
If you saw a drunk driver crash into a pedestrian, wouldn’t you go help the pedestrian? Or would you stand around complaining about the problem with drunk drivers.
When the market is down another 3000 pts, will you be happy? 5000 pts?
When you find yourself on the side of the wingnuts, you might want to look around and gather more data, rather than just rail away about the fat cats.
15
vboring
// Sep 29, 2008 at 12:07 pm
considering that it is a 110 page bill that few representatives have had a chance to read and digest, it is astounding that any of them voted “yes”
any bets on which pres candidate will be the first to switch over to oppose the bailout? Change or Maverick?
16
AndyC
// Sep 29, 2008 at 12:07 pm
For those who are so rabidly opposed to the bill that was just voted down:
What would you propose as an alternative?
17
John
// Sep 29, 2008 at 12:08 pm
budbrad, a 3000 drop in the Dow will create a fantastic buying opportunity for me. So bring it on!
18
BellevueRenterMan
// Sep 29, 2008 at 12:11 pm
Herman hit on a great point. What about the ‘next’ bill. This bill basically was to bailout banks.
Democrats want to bailout your neighbor family of 4 in that 2500sqft house who borrowed too much.
Now that the bill has failed, theoretically banks will not be making very many home loans. And the housing prices should “correct” themselves, at least to some degree here in our area.
Let us ride out this “hurricane’.
19
patient
// Sep 29, 2008 at 12:11 pm
AndyC, this is what I would propose:
- 5 years of no income tax for new home buyers.
Some crocks will be saved and the economy will recover faster but the historic lesson will be that being financially conservative is rewarded.
20
mukoh
// Sep 29, 2008 at 12:14 pm
John 3000 drop in DJIA will also create a vacuum in most of the regular saps paychecks. I wouldn’t mind paying 20% less for labor.
21
AndyC
// Sep 29, 2008 at 12:15 pm
Patient,
How does that help solve the credit crisis?
22
vboring
// Sep 29, 2008 at 12:19 pm
AndyC,
Get some independent economists who aren’t major shareholders of the largest beneficiaries of the proposal involved (sorry Paulson). Give them a few weeks to work something out. Something that could actually work, instead of something that is little more than back-door bailout.
If the economists can’t come up with anything viable, let the markets work things out.
23
patient
// Sep 29, 2008 at 12:21 pm
“How does that help solve the crrdit crsis?” It addresses the root cause, i.e rapidly falling home values that causes mortgage backed securities to be extremely risky and rated worthless. If you give new buyers incentive to enter the market price stability will occur making the mortgages easier to value.
24
Markor
// Sep 29, 2008 at 12:27 pm
budbrad: yes and yes. I’m not invested in this Ponzi scheme.
25
Markor
// Sep 29, 2008 at 12:36 pm
Exec pay capped and gov’t gets a guaranteed premium for taking on the toxic loans (some % above an indexed interest rate). If a bank still goes belly up then gov’t is first in line for assets, and the premium charged to other bailout participants goes up to compensate for any loss (like for credit cards).
26
SeattleMoose
// Sep 29, 2008 at 12:37 pm
VIctory…and hope for much needed meltdown and pain
At least until the sharks start round 2…….
As for alternative solutions…our “credit junky” economy must be allowed to crash before a REAL recovery can start. By not paying the piper now it just makes the eventual crash that much bigger.
27
SeattleMoose
// Sep 29, 2008 at 12:40 pm
What scares me is that I heard on the news this morning (radio) that the FED was meeting with the bankers of 10 foreign countries who expressed concern that the bailout amount was not big enough?????
Why would the dollar amount of the bill being foisted on the American people be any concern of foreign bankers?
28
Markor
// Sep 29, 2008 at 12:44 pm
It’s a huge concern to them because–brace yourself–many of them are eligible to get a check from this bailout too. American taxpayers will be bailing out a lot of the world.
29
budbrad
// Sep 29, 2008 at 12:57 pm
The problem with the ‘let it crash’ theory is that when it crashes, the foreign sovereign funds will swoop in and buy up everything for cents on the dollar.
30
Markor
// Sep 29, 2008 at 1:01 pm
I’d be buying for cents on the dollar too. Really I think it’ll be dimes on the dollar.
31
Dave
// Sep 29, 2008 at 1:01 pm
AndyC…
My proposal: We currently have in place a mechanism for dealing with the problem of undercapitalized banks. It’s called the FDIC! The FDIC has been quite adept at handling things so far. It must be noted that the nations largest bank failed last week and the FDIC engineered the sale to JPMorgan — and it didn’t cost them “A PENNY”! Let them continue doing what they are doing — taking over failed banks, wiping out the owners and upper managment (the one’s responsible, after all), and passing the assets off to the new owners. If they have assets that can’t be sold in the current atmosphere, then they can create another Resolution Trust to hold them until they can be sold. If you are going to use taxpayer money, loan it to the FDIC and Resolution Trust II, who have a track record of success.
The (failed) bailout was throwing money at the banks and bankers who created the problem in the first place. They have proved that they don’t deserve it.
32
budbrad
// Sep 29, 2008 at 1:02 pm
And the ‘crash will bring great deals’ is the same line of thinking that most Americans used when everyone was for outsourcing all of the US production overseas.
The cheap TVs were awesome, until everyone realized that the jobs were gone and never coming back.
33
Markor
// Sep 29, 2008 at 1:05 pm
I’d rather have the cheap, high-quality TV. I don’t make TVs.
34
patient
// Sep 29, 2008 at 1:07 pm
I think some of the stock market reaction is a result of the fear whipped up by the government and not any changes in fundamentals today…talk about backlash.
35
anna
// Sep 29, 2008 at 1:12 pm
Don’t bail out the biggies who made mistakes. Let them who fail. Give 700B directly to small and medium size companies that did NOT make mistakes, and let them grow and succeed. They will pick up the pieces of the biggies, and serve future needs of the market.
Or give the 700B to every person, since they will be shouldering the burden of inflation later on. The big banks already made enough money, and don’t deserve the handout.
36
angrybear
// Sep 29, 2008 at 1:25 pm
Be careful what you wish for. The institutional shareholders, fat cats and others are very angry and are going to try to force our hand, just like they did with Fannie and Freddie before Paulson took them over. The Dow is going to keep going down. Banks and other financial institutions will probably declare war on the consumer and find ways “to make it hurt” for us. Like suspending all types of lending, credit cards etc..
It’s not going to be pretty.
37
wakeup
// Sep 29, 2008 at 1:27 pm
Just to prove how silly most of the people here are or how silly I am. I predict that some kind of bailout plan will pass by this weekend.
38
David McManus
// Sep 29, 2008 at 1:31 pm
Survival of the fittest, that’s my mantra. If they can’t make it in the open market, then they should be allowed to fail. The only ones left standing should be the ones in good standing.
39
johnnybigspenda
// Sep 29, 2008 at 1:33 pm
i think there will be a plan passed by the morning. they were close on the votes..probably one or two concessions and it will swing enough to get it through.
will that be enough to reverse the spiral? probably not… but lets just see if the .gov is as good at generating a spin as I think they are. Today was planned… shake out the nervous nellies with ‘the bill didn’t pass!’ headline… then come back with something the next day and follow up with numerous ‘positive’ headlines about how the cred markets are improving, bank to bank spreads are improving… eventually leading up to how mortgage lending is ‘reasonable’ again… and then how housing has inventory has stopped increasing…
but its a poker game… the gov has to push us to the brink (and if they go too far, they won’t be able to take us back like they planned).
too many coffees this aft
40
98115renter
// Sep 29, 2008 at 1:41 pm
DOW down 7%. How is your IRA/401k doing? I dislike the bailout as much as anyone, but if you want to get paid on Wednesday or one month from now, we (U.S.) better think up something quick! I bet I am not the only one who went to the ATM today.
41
Carrot8
// Sep 29, 2008 at 1:42 pm
This bailout is about returning liquidity to the capital markets, and allowing the markets to function in a “normal” fashion.
They need to take out any language about restructuring mortgages for homeowners who have borrowed more than their means - then it has a better chance of passing.
If they can’t get a bill passed, we’re looking at a long recession.
42
rose-colored-coolaid
// Sep 29, 2008 at 1:43 pm
#16 AndyC,
I would propose letting the markets fail accordingly. The only things the government should be backing at this point are the things the government has explicitly backed. That would be government bonds and FDIC insurance.
The panic you’re seeing in the markets, by the way, are caused by the mismanagement of the executive branch and Bernake in announcing this crisis and bailout over a week ago. Their ridiculous power grab has been exposed and if they’d brought a less sickening plan forward you might have seen something pass.
43
David McManus
// Sep 29, 2008 at 1:46 pm
#40, my IRA/401k is doing great because if you’ve been paying attention for past year, you got out a lonnnnnnng time ago. I made more money shorting WM during the past year than I did at my job x 3.
44
vboring
// Sep 29, 2008 at 1:46 pm
A quick glance at political maps reveals that virtually none of the red states experienced bubbly prices, while nearly all of the blue states did (the exceptions appear to be Florida and Nevada), since republicans overwhelmingly represent the rural parts of the country.
From this perspective, this bailout bill is a mechanism for taking money from those that didn’t participate in the foolishness of the last decade (rural populations who tend to be republican) and bailing out those that did (urban populations who tend to be democratic). From this perspective, it is understandable that the republicans killed the bill.
A quick look at the way WA representatives voted on the bill shows that they followed the rural vs urban (and R vs D) breakdown very closely.
For reference, I think the whole American Political system is screwed and I have no intention in taking sides, just making obvious observations.
45
Markor
// Sep 29, 2008 at 1:50 pm
Hear, hear, rcc.
98115renter, the stock market is highly overvalued. It’s falling because banks won’t get the free money they expected from the taxpayers–yet. The free market is working; it’s not the end of the world. If your 401K goes up but you also pay for this bailout, you’re not necessarily better off.
46
98115renter
// Sep 29, 2008 at 1:53 pm
David McManus @ 40
Because you are versed enough in playing the ‘game’ you are at an advantage that the rest of us who have been making ‘responsible’ investments in mutual funds do not have.
Shorts are market manipulations for the rich, and you are contributing to the problem.
I find it strange that many posters on this blog are starting to show their real greed (just waiting for everything to fall so they can buy, buy, buy). I am simply interested in a reasonable housing correction, while others seem to be interested in making more $$ at the expense of the average investor.
Is nobody worried about credit running so dry as to not make payroll??????
47
Markor
// Sep 29, 2008 at 2:01 pm
98115renter,
Shorts are not just for the rich. You can short by buying an exchange-traded fund like SKF, just like buying any other stock. People who short are not contributing to the problem; what’s your basis for that?
Credit will not run dry, simply because the rich don’t get richer that way. I think most of the turmoil today is about making the rich richer, before Obama gets into office. A lot of the financial sites I pull up still have ads for cheap mortgages. Where’s the credit problem?
If the market tanks I get to buy a house cheaper. Nothing wrong or greedy about that. For every loser there’s a winner, and vice versa. Houses in Seattle clearly aren’t worth what most sellers want for them anyway.
48
TJ_98370
// Sep 29, 2008 at 2:01 pm
I was watching CNN right after the vote and some Republican representative (not Roy Blunt) went on a rant about how the bill failure was due to lack of Democratic support and a speech with partisan implications given by Pelosi right before the vote. In fact it was the Republicans who voted two-to-one against a bill initiated by their own party! It’s amazing how some people can twist reality around so completely.
49
98115renter
// Sep 29, 2008 at 2:09 pm
Seriously though. There’s a difference between a 25% housing correction and hoping for a depression so those with lots of capital can buy real estate and stocks at huge discounts.
There is a middle people.
50
Markor
// Sep 29, 2008 at 2:17 pm
98115renter, a lot of people here want the markets to be able to move down freely, that’s all. They actually want to prevent a worse depression that they think would result from having the taxpayers absorb banks’ losses.
51
David McManus
// Sep 29, 2008 at 2:17 pm
I’m not hoping for a depression, but will accept it if it’s necessary. This is just the normal business cycle. We don’t need to reward bad and unethical business behavior with a bailout paid for by my daughter’s future grandchildren. We all need to be brought back to reality for the way most of us have been living for years. We will be a much stronger nation for it.
Hell, my grandparents who were very young during the Depression shake their head at how people live nowadays….buying everything on credit. This shakeup is needed!
52
98115renter
// Sep 29, 2008 at 2:23 pm
A depression is not the normal business cycle. We are so used to huge volatility in the USA that we think a gigantic drop in markets is ‘good’ for us. Teach the bankers and us a lesson about our sorry ways.
Europe may have higher unemployment but they know how to manage their volatility better than we do through regulation. Those in favor of a huge drop or correction to punish Wall Street or those who haven’t been prudent borrowers are the flip side of an extreme coin that seeks enormous profits from market/housing bubbles.
53
Markor
// Sep 29, 2008 at 2:28 pm
98115renter, if the banks are not taught a lesson, there will be worse consequences. That’s what you’re advocating.
54
David McManus
// Sep 29, 2008 at 2:28 pm
I think we will have to move from a “wants-based” economy, to a “needs-based” economy. That is a good thing.
55
matthew
// Sep 29, 2008 at 2:28 pm
Johnnybigspenda,
You are wrong. There will be no vote tonight, it’s a Jewish holiday. Congress isn’t planning on meeting again until Thursday.
56
patient
// Sep 29, 2008 at 2:32 pm
I checked my 401k last night which is primarily in equities. I put in ~$20k so far this year and my gain since new year was negative $35k. I.e my balance at the beginning of the year was $35k - $20k = $15k higher than it is now even if I put in $20k so far. I’m I worried, absolutely not. If we get a huge stock market correction I will stil continue to buy at current rate and 25 years from now the loss I make on the way down will most probably no longer be a loss and the money I put in during the depressed years will be worth a heck of a lot more. If you are closer to retirement and are heavily stocks you took a huge risk and go against any recommendations and if you engage in risky gambles you need to accept to loose. I’m looking forward to stocks and housing alike getting to it’s true value without any government intervention.
57
98115renter
// Sep 29, 2008 at 2:33 pm
Markor, I agree punishment is needed, in the form of incresed regulation and Executive Pay reform, but it is not necessary to bring the entire economy down just to prove a point.
58
jon
// Sep 29, 2008 at 2:36 pm
“I was watching CNN right after the vote and some Republican representative (not Roy Blunt) went on a rant about how the bill failure was due to lack of Democratic support and a speech with partisan implications given by Pelosi right before the vote.”
Without a clear plan, throwing this amount of money at Wall St. will not solve the problem. The Speaker of the House was stating very clearly that in her mind the cause of the crisis was the free market. That indicates that any oversight going forward will ignore the central role that all the congressional mandates on the FMs had in causing all those bad loans to be written and then ignoring all the warnings issued by the administration to Congress over the past several years. The fact the Pelosi was saying it was going to be business as usual going forward is a very good reason to kill the bailout until a correct understanding of the root of the problem is developed. Otherwise the $700B will be wasted and it will just make the recovery that much slower.
59
sunsplint
// Sep 29, 2008 at 2:37 pm
The government’s job is to manage our society during times of upheaval. The bailout was supposed to support a free flowing credit market.
However, based on the market actions since the no vote, it is pretty clear that the credit market is starting to hunker down. Remember there are controls in place within the DOW that keep it from absolutely crashing to the bottom. The actions over the rest of the week will show if the credit market is truly cinching up or if they are just trying to send a signal to lawmakers.
60
98115renter
// Sep 29, 2008 at 2:38 pm
Another point, if you think the current crisis is teaching the Bankers a lesson, just look at how all of the Nation’s deposits are being consolidated into about 4 megabanks with the help of the Fed and FDIC. That should be much more worrisome than the bailout itself.
61
shane
// Sep 29, 2008 at 2:40 pm
98115renter you are watching too much CNBC. That channel is bad for your brain, stop. Assets are overvalued, the correction will be rough but its not the end of the world.
62
matthew
// Sep 29, 2008 at 2:47 pm
98115,
The Bailout is exactly what would have brought the system down. We preserving America by voting against it.
Congress did the right thing. The correction will be painful but short term, we won’t have a lost decade like the Japanese did when their government attempted to intervene and fix asset prices.
You should seriously stop listening to the MSM and examine the facts yourself.
63
98115renter
// Sep 29, 2008 at 2:47 pm
shane, I don’t watch CNBC. I’m afraid of the megabanks and of huge contraction causing me to lose my job.
matthew, I don’t have cable so don’t watch msn. Please don’t accuse me of something that you have no knowledge of.
64
98115renter
// Sep 29, 2008 at 2:51 pm
Sorry for the misread, apparently MSM means ‘mass media’. Still, I get info from multiple media outlets, so please don’t use assumptions about where I get my news to color your comments.
65
shane
// Sep 29, 2008 at 2:58 pm
98115renter this $700 Billion bailout would not solve our problems. It’s a desperate hail mary, but the problem is far too big for that. We are going to need that money for other purposes, propping up failed banks is not the best use of it imo.
Plus I’m a relatively young worker at Boeing, who has historically made slashing 10’s of thousands of jobs a hobby, so who knows about my job. We’ll survive.
66
slug
// Sep 29, 2008 at 3:00 pm
Dave Reichert NEEDS YOUR HELP!!
I just called his office to say “Thankyou!” for his NAY vote. His aide was depressed and said they have been slammed with angry calls all day long.
CALL him/FAX him with your support and thanks. Otherwise, he *could* change his vote as this drags on.
Toll Free Capitol Hill Switchboard:
1-877-851-6437
1-800-828-0498
1-866-338-1015
1=866-220-0044
67
matthew
// Sep 29, 2008 at 3:02 pm
slug, thanks for the heads up. Will call ASAP.
68
David McManus
// Sep 29, 2008 at 3:11 pm
I’m almost certain that NAR was 100% in support this bailout. And since Puget Sound is pink pony land……
69
Notabull
// Sep 29, 2008 at 3:34 pm
“My proposal: We currently have in place a mechanism for dealing with the problem of undercapitalized banks. It’s called the FDIC! The FDIC has been quite adept at handling things so far. It must be noted that the nations largest bank failed last week and the FDIC engineered the sale to JPMorgan — and it didn’t cost them “A PENNY”! Let them continue doing what they are doing — taking over failed banks, wiping out the owners and upper managment (the one’s responsible, after all), and passing the assets off to the new owners. If they have assets that can’t be sold in the current atmosphere, then they can create another Resolution Trust to hold them until they can be sold. If you are going to use taxpayer money, loan it to the FDIC and Resolution Trust II, who have a track record of success.”
I have seen this proposal go around and I’m in general agreement. AFAIK, the FDIC is mostly funded by the insurance policies that the banks pay to the FDIC. So my modification to your proposal is that we immediately enact regulation that allows the FDIC to go and take a DEEP look at the balance sheets of the banks (which I think they do already). Then, charge the screwed banks MUCH MORE in insurance and bring them down ASAP. Seize them, sell them off, dispose of them, fire the execs, wipe out the shareholders.
If we’re going to spend any money (and I have no doubt we need to) then we should spend it through the FDIC and direct the help towards the organizations that are the healthiest and more likely to make it through anyway. We should do it quickly and intelligently. The failed bailout was not discriminatory enough as the execs were not fired and the ones that screwed up the most were in line to get the most help! It’s entirely backwards.
70
Notabull
// Sep 29, 2008 at 3:43 pm
Is nobody worried about credit running so dry as to not make payroll??????
Holy crap! Companies are using credit lines to make payroll???!!!
Seriously though, I’ve heard this argument before and I’m always left with the thought that while short term credit lines are important for emergency purposes, it seems that it might be, ummm, wiser to pay employees with money you have, rather than money you borrow. This seems more like a cash-flow problem brought about by an excess amount of cheap debt than an actual real problem.
I know that companies need access to longer term credit in order to expand, and to me that is the big and longer term problem. But it just seems like a scare tactic to get immediate movement on a bailout by making people believe that their next paycheck is dependent on passing a bailout bill NOW NOW NOW.
If people aren’t buying as many cars because the interest rate on the loan is now dependent on them being a good credit risk, I’m just not seeing that as a bad outcome. We’ve been buying too many cars anyway, and I don’t give a crap if GM goes out of business - they should have gone out of business years ago if the “free market” was allowed to run its course.
71
David McManus
// Sep 29, 2008 at 3:43 pm
Gosh, it’s funny you read the SeattleTimes board on the bailout failure and readers are flaming away saying they will vote anyone out who voted against it.
http://community.seattletimes.nwsource.com/reader_feedback/public/display.php?id=867&offset=150
72
matthew
// Sep 29, 2008 at 3:49 pm
McManus,
Seems about 50/50 to me on there…
73
matthew
// Sep 29, 2008 at 3:49 pm
The CNBC poll has it at about 47 percent to 44 percent saying that Congress did the right thing.
74
David McManus
// Sep 29, 2008 at 3:51 pm
So people have gone from 10-1 to 50-50 in a day?
75
matthew
// Sep 29, 2008 at 3:57 pm
Nah,
You know the whiners would be out in full force once it failed. Probably most people that were pro bailout were quiet before the vote because they assumed it would be smooth sailing.
Then they got home, saw their 401k tanked, and picked up the phone in a rage. That’s usually how things work in the good ole USA.
76
Alan
// Sep 29, 2008 at 3:58 pm
That could be astroturfing, David. I find 90/10 to 50/50 suspicious.
77
Markor
// Sep 29, 2008 at 4:00 pm
98115renter the people most suggesting that the economy will go down in flames if there’s no bailout are those who stand to gain the most from it. I’ll believe it when I see it. (And be prepared just in case.)
4 megabanks is worrisome but nothing yet stops other banks from taking away some of their market share.
78
Notabull
// Sep 29, 2008 at 4:01 pm
“So people have gone from 10-1 to 50-50 in a day?”
The loudest voices are usually in opposition to what’s happening. Those in favor of the bailout obviously weren’t calling their representatives angrily telling them to vote for something that was “for sure” going to pass.
Quite honestly, I think you would get more public support if you did an FDIC-style plan for $700B that said:
-FDIC seizes crappy banks
-Execs fired
-Shareholders get nothing
-Decent banks that made good/not-terrible decisions are recapitalized
-Toxic waste loans bought and held by government until a later date, where we *hope* to get some or all of the money back
-Name of plan changed to “Fat Cat Executives Fired Bank Seizure Plan”
When you put “Bank Bailout” and “$700B” together in a sentence, the public (rightfully) freaks out. They want *something* to be done, but not if it means that the people who created the problem keep their jobs, while the general public worries about our own jobs with no golden parachute. Hell, I don’t even have a plastic parachute, let alone a golden one.
79
98115renter
// Sep 29, 2008 at 4:04 pm
You guys, I am not pro-Wall Street or pro-banking, but this will pass sooner or later. The only reason it hasn’t yet is because of political grandstanding.
Back to post #47, If shorts are not contributing to the problem, why have they been banned in Europe and temporarily in the US? It is pure market manipulation. And as far as availability of shorts or ETF funds for the average everyday 401k investor, sorry but those funds are rarely available in a company-sponsored 401k program.
98115renter
80
Notabull
// Sep 29, 2008 at 4:11 pm
Back to post #47, If shorts are not contributing to the problem, why have they been banned in Europe and temporarily in the US?
They have been banned for political reasons and to show that “something is being done”. Even with the ban on shorting, financial institutions appear to still be dying a death. Wachovia went down, and shorting was banned at the time.
I’m sure that organized shorting can sometimes affect the stock price, but it is *not* in itself an evil thing, and it has not caused the issues we’ve been seeing.
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David McManus
// Sep 29, 2008 at 4:12 pm
There should be no law that says I can’t make money if I bet a company is going to fail. I didn’t work for WM, nor did I sit on their board or was privy to any insider info aside from what I read in their financial reports so why is it so evvvvvvvvil that I make bank when they go T**Ts up? Who really didn’t see it coming? Was it really a shock? Why should that be illegal?
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newbie
// Sep 29, 2008 at 4:13 pm
Didnt WAMU get 7+ billion a few months ago from the government and they still went under? Did we get that money back when they were sold off?
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Civil Servant
// Sep 29, 2008 at 4:15 pm
Newbie — No, it was a private equity firm that invested in WaMu.
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newbie
// Sep 29, 2008 at 4:16 pm
Thanks CS!
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Dave
// Sep 29, 2008 at 4:17 pm
Notabull…
There is no need for any additional regulations. The FDIC knows what is on the balance sheets of the banks. Right now, they lack the insurance reserves to do aggressive, widespread closures. But stick a couple-hundred-billion of taxpayer funds in their wallets, and turn them loose on the banks.
The dirty little secret is that far too many banks are technically insolvent. They sit on their MBS’s, carrying them on their books for too-high valuations. Several weeks ago, Merrill found a buyer for something like $30B of MBS’s, for 22 cents-on-the-dollar. That sounds like a properly functioning market to me. Maybe it was a “fire sale” price, but that’s the risk you take.
The banks fear that they may have to value their MBS’s closer to what Merrill sold for (otherwise known as a market price). The FDIC should just step in and enforce market prices where appropriate. Presto! An insolvent bank that soon has a new owner, be it another bank or the FDIC.
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deejayoh
// Sep 29, 2008 at 4:17 pm
that $7b was from TPG - private investors. And they lost it all
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Notabull
// Sep 29, 2008 at 4:17 pm
“You guys, I am not pro-Wall Street or pro-banking, but this will pass sooner or later. The only reason it hasn’t yet is because of political grandstanding.”
The issue here is that while some people don’t want anything done, most people do want something done and the bailout plan is just plain BAD. It does not protect tax payers enough, it does not bring in regulation while the leverage is there to add it to the bill, and it does nothing to prevent the cause of the issue: declining home prices.
The plan was crafted from the perspective of a banker: Paulson. It was plainly a Wall Street bailout, and the public is FED UP of privatizing profits and socializing losses. The administration has zero credibility left (with either side of the aisle) and have told us to “trust them” too many times. We’ve been burnt before…
Give the FDIC $700B and tell them to “fix the problem” with the requirement that any fixing means the execs and shareholders get nothing. Expand the power of a trusted institution (FDIC) and not an untrusted lame duck administration!!
Personally I’m for a bailout, but I don’t want a single CENT going to a company that continues to pay the executive management that got the company into the hole that I, as a tax payer, am helping them out of.
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jon
// Sep 29, 2008 at 4:18 pm
They may have been concerned that people were shorting and then shouting “oh, look a run on the bank, better get your money out now!”
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matthew
// Sep 29, 2008 at 4:18 pm
If shorts were the problem, why did the market plunge 700+ pts today while shorts were banned?
Shorting provides stability for the market and a hedge for investors. When the market goes down, short sellers generally cover their shorts, thus buying the stock back and flattening the declines.
Short selling was banned because financial institutions were blaming them for their misfortunes, when in reality their balance sheets were to blame. If anything, banning short selling is going to make the declines even more dramatic.
Ironic that the Chinese have decided to allow short selling in order to curb their dramatic market swings.
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John
// Sep 29, 2008 at 4:19 pm
People often don’t vote based on their pocket books, which I think is dumb. But I am actually kind of surprised that many don’t want the bailout to pass. Unless they don’t have a 401k, they are getting killed just the same. It is like those who would rather lose their jobs than to take a paycut.
98115renter, China didn’t allow shorting and their stock market still dropped from 6000 to 1800. Recently, they began to allow shorting in order to provide liquidity.
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Notabull
// Sep 29, 2008 at 4:21 pm
There is no need for any additional regulations. The FDIC knows what is on the balance sheets of the banks. Right now, they lack the insurance reserves to do aggressive, widespread closures. But stick a couple-hundred-billion of taxpayer funds in their wallets, and turn them loose on the banks.
Great - let’s do it!!! I’m all for it. I could not BELIEVE when I heard from Paulson that the bailout had to be “appealing” for the banks involved or they wouldn’t do it. Well, then let’s make a new “law”. That’s what we do in congress. Let’s make this “law” say that the banks have no say in this and that if they are deemed to be insolvent then we’re seizing them.
We need to stop worrying about Wall Street and stock market, and focus on fixing the system ASAP.
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98115renter
// Sep 29, 2008 at 4:23 pm
Our entire market has been reeling from hedging and shorting and blah blah blah. Why would a company that is fundamentally sound rise and fall 10% every god"golly" day. Market manipulation is everywhere and it primarily the domain of traders and the rich. Joe Schmo only suffers for it.
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Dave
// Sep 29, 2008 at 4:26 pm
This bailout, if it had passed, would not have halted the decline in either the housing market or the stock market. Home prices will continue to fall until they reach a level where people with a good job, money in the bank, and good credit can get a rational mortgage. The stock market will continue to fall because we are going into (or are already in) a recession.
You need money to buy this stuff, and right now money is being destroyed at a pretty fair clip. There will be a lot of pain as all this leverage is unwound. Only time will fix it. These bailouts will only prolong the pain.
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Scotsman
// Sep 29, 2008 at 4:26 pm
A fundamental question: since when is it the governments job to run around saving everybody’s butt? How much of this “crisis” is manufactured, and temporary, verses permanently crippling? I bet we see the market rally tomorrow.
Maybe this is a good time to reflect on whether the U.S. should remain dedicated to capitalism and free choice, or veer off into blatant socialism.
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Notabull
// Sep 29, 2008 at 4:30 pm
Our entire market has been reeling from hedging and shorting and blah blah blah. Why would a company that is fundamentally sound rise and fall 10% every god”golly” day. Market manipulation is everywhere and it primarily the domain of traders and the rich. Joe Schmo only suffers for it.
Did you happen to see the stock market today? BTW you can’t short financial stocks right now, and Wells Fargo just went down 10%, more than the market as a whole. Due to short selling? No. Due to regular old vanilla selling? Yes.
Yes, there are stock market manipulators out there, but the truth is a little more complex than you state.
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98115renter
// Sep 29, 2008 at 4:30 pm
Scotsman, disregarding the bailout, I believe we can have a capitalistic economy with serious regulation and transparency.
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Markor
// Sep 29, 2008 at 4:34 pm
98115renter, what Dave @ 93 said.
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Markor
// Sep 29, 2008 at 4:39 pm
I sure hope the nation reflects on it, but likely Reaganomics will continue unabated until there’s little left to steal. Notice the bailout is almost all trickle down. I wonder how bad it will get here before people finally start seriously thinking about the socialist countries that have a far higher standard of living than we do.
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Markor
// Sep 29, 2008 at 4:40 pm
98115renter, Republicans call that socialism = bad. In one of the Scandanavian countries, I forget which, everyone’s salary is public info.
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Wisen Heimer
// Sep 29, 2008 at 4:47 pm
As a 50-plus-year-old, I am continuing to contribute $20,000 a year to my 403(b)(7)(in Vanguard mutual funds), with bi-weekly contributions from my paycheck, in the hope that when I retire some ten to fifteen years from now, I will have been buying at relatively bargain-basement prices.
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george
// Sep 29, 2008 at 4:48 pm
I have a question for the people saying “let the financial system burn, man!”
Is that just a vote against having an economy, and a vote against keeping your job?
Or is it also a vote in favor of the apocalypse based on your religious beliefs? Are you currently living as a survivalist or do you hope to in the near future?
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george
// Sep 29, 2008 at 4:50 pm
Wisen,
What about people who are retired now?
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Wisen Heimer
// Sep 29, 2008 at 4:55 pm
People who are retired now should have heeded the advice of most financial planners: have most of your wealth in U.S. Treasury Bills/Bonds, paying, as of a couple years ago, some 5% per year in long-term bonds.
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Markor
// Sep 29, 2008 at 4:56 pm
No george, it’s a vote for the economy, a healthier one. When you get sick what’s better, taking a pill to mask the symptoms, or resting? The bailout is the pill. Resting is letting the markets winnow the losers. Don’t believe the fearmongers–the ones who will benefit the most from a bailout–that the economy will be destroyed.
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Notabull
// Sep 29, 2008 at 4:59 pm
“What about people who are retired now?”
The ones that didn’t get greedy and stupid already would have significantly decreased their exposure to stocks which are well known as a higher risk asset class. Depending on how far into retirement they are, their exposure to stocks would likely be 50% to 0%.
A 65 year old can expect to live another 10-30 years and so the usual advice is to decrease stock exposure, but not leave stocks entirely as 30 years is a long time.
If you’re relying on your investments for your income now, and you can’t afford to deal with large declines, then you have no business being invested in stocks at any time in the business cycle.
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Scotsman
// Sep 29, 2008 at 5:09 pm
There’s still enormous wealth in this country, based on real assets and productive capital. What we are watching now is the destruction/re-allocation of leveraged paper assets. While those on the losing end of a trade are begging for government intervention, they are in almost all cases the ones best able to carry the burden of a loss. One has to ask, exactly what did they really contribute to the economy outside of an inflated sense of wealth?
Those who are involved in real, productive activity will not be hurt by this downturn. Assets will be reallocated to more productive endeavors, and the economy will flourish again, from a more solid foundation than that provided by the FIRE economy. Wait and see. This is necessary, healthy, and to everyone’s benefit- in the long run.
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cm
// Sep 29, 2008 at 5:10 pm
I normally lurk here, but am concerned at the direction the conversation is taking. This bill isn’t a bailout of anything, the intent is inject liquidity into the system. When banks take losses they don’t go into a corner and curl up and die, as some posters seem to wish would happen. They stop lending money. In an economy based on credit, this is a disaster.
Sure, you can argue that we should have a cash based economy or some ideal economic system of your own devising based on a misunderstanding of economics, but the fact remains that we have a credit based economy, and we’ll have a depression without available credit. If you think your life will continue unchanged or that you’ll somehow benefit from the misery of others during a depression, grab a history book and have a look at the 1930s and what grew out of the desperation it caused worldwide, the 1940s. No one was partying, my friends.
I’m sure there are many ways of injecting liquidity, and the “bailout” bill is but one of them. If the treasury and fed think there is a significant enough risk to justify asking for it, we should all pay attention.
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Jonny
// Sep 29, 2008 at 5:23 pm
these banks should feel lucky to get any terms at all. i’m for letting them fail.
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