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2.7%  Q1 GDP    4.57%  avg. 30-year mortgage     9.5%  Unemployment

Bailout Bill Is Killed By House

By a vote of 205-228, the House has killed the current version of the $700 billion Wall Street bailout bill.

Wall Street has plunged in response.

At about 2:15, the Dow was down about 560, with the Nasdaq and S&P 500 down by more than 6 percent.

Investors were shocked by the news. There was little doubt that the bill would pass after leadership on both sides of the aisle voiced support for the version hammered out this weekend, analysts said.

"We thought we had a deal that was passable," said Art Hogan, chief market analyst at Jefferies & Company. "We're in trouble and the market is showing you where we're going if we don't have a rescue plan."

-- Frank Ahrens and Renae Merle

By Frank Ahrens  |  September 29, 2008; 2:15 PM ET
Categories:  The Ticker  
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Comments

We needed a different bill with long-term fixes in mind. We need to inject money to the lending institutions as this issue is mostly lending related. No money to holding companies or investment banks as of now.

Take the time and energy to fix this mess in a way that will not come back to haunt us on November 5th.

James

Posted by: James | September 29, 1908 2:22 PM | Report abuse

Conservative "Main Street's" hatred of this bailout puts lawmakers from Republican districts who vote for it in serious peril.

On top of that is Nancy Pelosi's verbal posturing, partisan declarations that make bailout package appear to be some Democratic trumping of Republican incompetence, was enough to enrage and turn off a lot of Republican representatives who might have voted for it anyways.

IMO Nancy Pelosi could have pulled it off had she not insulted and enraged some Republicans with her triumphalist announcements today that cast a partisan light on the bailout.

Let the system crash. All the players, from the Congressional leadership to Wall Street, can't stop being partisan and self-interested enough to stop their posturing and put together something meaningful. They've seen this coming for months/years now.

If they can't come up with something better than what was voted on today, they can't run the bailout properly.

Better to let the system crash than the same idiots use a mandate and $700 billion check to do more damage.

Posted by: AsperGirl | September 29, 1908 2:26 PM | Report abuse

Hey, the world didn't end. They promised it would!

Posted by: Pilgrim | September 29, 1908 2:28 PM | Report abuse

Woo Hoo!

Now to get a REAL bill not created by the Bush/McCain Destroy America wrecking krewe!

One that purchases the literal RESIDENTIAL US MORTGAGES directly and provides ZERO dollars for the Bermuda-based financial firms trying to loot the US Treasury for the ultra-rich top 0.1 percent - the people who think $5 million a year is "middle class" and who live in 7 or 13 houses but they can't remember how many ...

One without ANY bar on seeking clawbacks - as required by LAW in FISA - of all salary increases, bonus, options, and retirment matches for the very CEOs and top execs who LOOTED the firms and LIED to we shareOWNERS about the CDOs.

NOW THAT BILL MIGHT PASS!

JUST SAY NO! to the Bush/McCain flawed bill and bring us a REAL ONE!

Posted by: Will in Seattle | September 29, 1908 2:30 PM | Report abuse

Yep, the House GOP just came out and said that the partisan rhetoric on the part of the Democrats was unhelpful.

Nancy Pelosi is creating problems with her posturing in destructive ways. Like her anti-drilling rhetoric and posturing a few weeks ago that didn't help Democrats and torpedoed any real action.

Posted by: AsperGirl | September 29, 1908 2:34 PM | Report abuse

The bill needs to include stronger language concerning reimbursement to the American Public for any tax dollars, with appropriate interest, used to stabilize the market.

This could be an opportunity to shore up/fund Social Security, and to use additional funds from the investment to move the conversation on National Healthcare Insurance.

Let's show some brains, and courage, Congress!

Posted by: Rob in NH | September 29, 1908 2:36 PM | Report abuse

Well George,

this is what happens when you mislead a nation about making pre-emptive war and run the White House on the premise of "reality is what we say it is".

So just what was that you were saying?

No one will believe you and stand behind you when you are a lier. You are to blame, so go in shame.

Posted by: Madeleine | September 29, 1908 2:37 PM | Report abuse

I'm Republican and I'm embarrassed to admit that fact right now. The Republicans from rural, Southern states let us down, in all likelihood because they don't understand what the bill does. That's fine - any recession/depression will almost certainly hit their states hardest so they get what they deserve. Here's to 25% unemployment for Alabama!!!

Posted by: LamontS1 | September 29, 1908 2:37 PM | Report abuse

House GOP member is speaking at GOP news conference on FoxNews holding up text of Nancy Pelosi's speech, calling it partisan and a "failure to listen and failure to lead".

Posted by: AsperGirl | September 29, 1908 2:38 PM | Report abuse

Let it burn! No more artificial injections of our money into a system and problem that is so complex no one really knows how far it even may extend. Let the market fix the problem it created! Now maybe people won't scoff when economists say we need to go back to the gold standard. If our currency was 100% backed by gold this would have never happened. Ron Paul doesn't look so crazy now does he? Long live the Republic!

Posted by: LibertytoAll! | September 29, 1908 2:39 PM | Report abuse

We can see through the Main Stream Media and remember that it was in the Clinton administration that the standards on lending for home mortgages began to crash. Bush, unfortunately, because of his lack of free market principles, did not and will not help. The Democratic answer, of course, is to let the government solve the problem. But the government is actually at the root of the problem. Where are the analyses of the Fannie Mae and Freddie Mac lending practices that put us in this mess? Maybe the problem is that the MSM darling, Senator Obama, will look bad if the story is told.

Posted by: Main Street | September 29, 1908 2:40 PM | Report abuse

"Yep, the House GOP just came out and said that the partisan rhetoric on the part of the Democrats was unhelpful.

Nancy Pelosi is creating problems with her posturing in destructive ways. Like her anti-drilling rhetoric and posturing a few weeks ago that didn't help Democrats and torpedoed any real action.

Posted by: AsperGirl | September 29, 2008 2:34 PM"

Typical Repubican partisan commentary, with an attempt to switch the blame for 8 years of failed Republican leadership in the economy to someone else.

This is why I laugh out loud whenever I hear that wonderful Republican phrase "personal responsibility." They mean it for everyone else but themselves and the businessmen who have, with their help, driven this country into the ground.

The GOP policy of surrending this country to the interest of business over people got us into this mess. And no amount of cheap theatrics, political flim flam and childish finger pointing will change who is to blame - the GOP and their business owned President. Follow your own motto, GOP, take responsibility.

Posted by: Dave in MA | September 29, 1908 2:41 PM | Report abuse

Will there be another bill? I think congress is about to go on vacation...

Posted by: Gurduloo | September 29, 1908 2:41 PM | Report abuse

Hey George! The chicken are coming home to roost.

Now you can really say a heck of a job, before leaving the White House, with mission accomplished, and pockets full of valueless dollars.

Posted by: bekabo | September 29, 1908 2:42 PM | Report abuse

Wow it didn't take long to start the politics. I wonder if we will find YouTube clips of this in a month from now to show the additional 5% that will be added to the unemployment rolls.

As a business owner my first line of protection for my business are salaries and I am cutting. I feel for those who may not make it but I can't find credit that is reasonable.

Let congress hire those I lay off.

Posted by: NYC | September 29, 1908 2:42 PM | Report abuse

I am shocked by how naive people are. You have NO idea of what it would be like to live through a crash! Imagine YOURSELF in a bread line. Putting cardboard n your shoes because the sole is worn out and you cannot buy any shoes; either because there are none to buy! Or you do not have the money. Picture yourself sitting in a house with no electricity because there is none! And you cannot cool or heat your house. Not for a few days; but maybe for a few years!
Picture having no medical care , no transportation. This is not just some minor financial inconvenience we potentially face. When they say melt down they mean melt down. Maybe wolf has been cried too much so that people are immune to it. But think again. This is not a dress rehersal. Folks this is the REAL deal! This is way beyond how Bush screwed up. Yes he did. And the big wigs on WS do not deserve any help. But it is all intertwined and will definitely effect us all. Make no mistake. The safeguards to keep us out of a depression like that of the 30's have been removed. This bill establishes that. And that right now, is more important than the 700 billion price tag. You guys no nothing of economics. No offenses but you are just too shallow in your understanding and really do not appreciate this. This is not an emotional necessity. This is a financial necessity.
Plus the world is very different than it was then. You have less moral code operating. There will be looting, stealing, violence like you have never seen. People are going to kill for what you have. Make no mistake. we REALLY cannot afford to not have this bill pas.. Get over it folks. Things are going to be very hard for a long time. Very hard. But I sure don't want a depression. And that is where this is headed. You need to educate yourself and stop reacting emotionally to this stuff.

Posted by: Kate | September 29, 1908 2:43 PM | Report abuse

The Yahoos and idiots--mostly southern rural Republican hicks but with a few idiotic left-wing boobs (Code Pink and Dennis Kucinich, for example) thrown in--have won.

God help the United States!

Get that revote now!

Fools and idiots!!!

Posted by: jm917 | September 29, 1908 2:45 PM | Report abuse

"We thought we had a deal that was passable," said Art Hogan, chief market analyst at Jefferies & Company. "We're in trouble and the market is showing you where we're going if we don't have a rescue plan."

What do you mean "WE", rich man?

Posted by: georgeK3 | September 29, 1908 2:46 PM | Report abuse

"The Democratic answer, of course, is to let the government solve the problem. But the government is actually at the root of the problem. "

Is this not a Bush/Paulson plan?

Didn't Phil Gram introduce the Gramm-Leach-Bliley Financial Services Modernization Act in 1999 (yes during Clinton Years) that most people can point to as one of the root causes of the issue?

Please stop grasping at straws.

James

Posted by: James | September 29, 1908 2:46 PM | Report abuse

The good news is that those of you who were worried about retirement can stop worrying - you won't be able to. We will have jobs waiting for us at Walmart, or some other non-union superwhatzit when our prime working days are over for the rest of our lives.

And then, in all probability, our bodies will be used for fuel and fertilzer after, to pay off our debts.

Thanks George W. and the selfish SOBs of the GOP!

Posted by: Larry from RI | September 29, 1908 2:47 PM | Report abuse

couple pretty interesting articles from greenfaucet...

http://www.greenfaucet.com/node/2975
http://www.greenfaucet.com/aussie-nz/are-you-really-prepared-for-whats-coming/02130

Posted by: macebruce | September 29, 1908 2:50 PM | Report abuse

Tomorrow is a quarter-end, and the end of the U.S government fiscal year, and the fiscal years of many companies. If we make it through tomorrow, then you can relax.

Posted by: bkp | September 29, 1908 2:57 PM | Report abuse

You've done a fine job BUSHIE.

Posted by: Larry in Houston | September 29, 1908 3:00 PM | Report abuse

"Typical Repubican partisan commentary, with an attempt to switch the blame for 8 years of failed Republican leadership in the economy to someone else."

Posted by: Dave in MA | September 29, 2008 2:41 PM

It was Barney Frank in 2003 who fought against and blocked Bush's attempts to regulate Fannie Mae and Freddie Mac. It was the Democrats in 2005-2006 who blocked John McCain's bill to reform and regulate Fannie Mae and Freddie Mac after their accounting corruption came to light.

These "subprime" mortgage requirements on banks, Fannie Mae, Freddie Mac and other minority/social welfare programs imposed on our banking system by government were all Democratic creations and they have been blocking Republican efforts to reform and regulate for a long time. The Democrats postured attempts to control the out-of-control part of the finance sector that their minority loan programs became, as "racist" and "anti-poor".

Posted by: AsperGirl | September 29, 1908 3:04 PM | Report abuse

Let's remember that investment banks, unlike commercial banks, don't lend money--they borrow it, use it without much regulation, do not guarantee or protect people's money with the FDIC insurance--and now, we're supposed to bail them (Wall Street and its brokers) out of this? Did you know that Paulson could enter government "service" after his years of profits at Goldman Sachs without having to pay capital gains when he cashed his stock earnings out? (Thanks, Reagan!)... Poor guy! What a jerk..and we're supposed to use his plan and advice and bail these turkey necks out of their ill-begotten gains and our losses? No way...

Posted by: Douglas Scott Treado | September 29, 1908 3:06 PM | Report abuse

"I am shocked by how naive people are. You have NO idea of what it would be like to live through a crash! Imagine YOURSELF in a bread line."

Posted by: Kate | September 29, 2008 2:43 PM

You clueless, pie-in-the-sky left wingers are the ones who are naive. This crash has been coming for a long time.

Why do you think a lot of rich people have been selling stocks and buying gold for the past year?

Have you been living in a cave for the past year? A cave lined with narcissistic left-wing identity politics dreams?

Hillary Clinton is the person we needed, not Barack Obama. Now we have a choice between two economics idiots, and no leadership in Nancy Pelosi and Harry Reid.

Posted by: AsperGirl | September 29, 1908 3:09 PM | Report abuse

"It was Barney Frank in 2003 who fought against and blocked Bush's attempts to regulate Fannie Mae and Freddie Mac. It was the Democrats in 2005-2006 who blocked John McCain's bill to reform and regulate Fannie Mae and Freddie Mac after their accounting corruption came to light."

You need to step back and stop being partisan for a few minutes. This whole economic collapse is not only confined to Fannie and Freddy. If so the fix would be pretty easy. Just buy up all the loans of Fan/Fred and re-negotiate all of them to a 30 year fixed at somewhere near market rate. People can pay their mortgages (to the banks/fannie/freddie) and money will come into the system.

This is not the only problem with the financial system nor can it be the only place blame is laid. Both Dems and Reps are to blame as is the laissez-faire economic policy of the current administration.

If you aren't going to do more than just rebut with current GOP talking points just stop posting. This is a complicated issue and needs thoughtful debate and discussion with all concerned parties to be solved. We do not need a band-aid.

James

Posted by: James | September 29, 1908 3:13 PM | Report abuse

"You need to step back and stop being partisan for a few minutes. This whole economic collapse is not only confined to Fannie and Freddy...

"If you aren't going to do more than just rebut with current GOP talking points just stop posting. This is a complicated issue and needs thoughtful debate and discussion with all concerned parties to be solved. We do not need a band-aid."

Posted by: James | September 29, 2008 3:13 PM

Yes, it was due to all those student loan defaults.

Get a clue. Why don't you do a little background reading before you start posting commentary on other people's opinions and ideas?

Posted by: AsperGirl | September 29, 1908 3:17 PM | Report abuse

I read the bill online and was astounded at the number of loopholes for the Wallstreet GotBucks Boys and not enough reimbursement to the American Taxpayer for bailing out these irresponsible people. The Golden Parachutes were merely relegated to being silver, not good enough for me. Also, there needs to be more support for small and medium sized businesses and the unemployed.

Everyone wants to place blame on those who purchased homes based on what where touted as favorable mortgage schemes instead of the irresponsibility of those that offered them in the first place. Fortunately, my home is nearly paid for, but I know lots of younger people were gullible enough to fall for this claptrap and speculators took full advantage as well.

The bill needs to be rewritten and completely revised to make sure Wall Street supports our economy on equal terms with the American taxpayer.

Back to the drawing board boys and girls, and do it correctly this time.

Posted by: Constance Avery | September 29, 1908 3:20 PM | Report abuse

"Worst case, Dow will start falling toward 8000. Otherwise will settle around low-to-mid 10,000's (10,200-10,600)."

Posted by: AsperGirl | September 29, 2008 2:15 PM

Above was my prediction from elsewhere earlier today.

I also predicted there would be selling into the close.

The Dow restarted falling after Barney Frank came on for a press conference a few minutes ago, and has fallen more than a hundred points since he started talking. He was joking and mocking Republicans.

Nancy Pelosi et al are pictures in failed leadership.

Why in the hell would Pelosi be making her partisan, triumphalist, divisive speech before this vote, angering Republicans? And she didn't even deliver the Democratic vote: 94 Democrats voted against the measure. What a jackass she is. If she wasn't going to deliver the Democratic votes, she might have given a less inflammatory speech bashing Republicans before the vote was taken, causing some of them to walk away.

She's a prime example of a snake in the grass, Machiavellian sabotager.

Posted by: AsperGirl | September 29, 1908 3:23 PM | Report abuse

Looks like Nancy Pelosi will have mismanaged this vote into engineering an historic, biggest one-day drop ever in the Dow Jones Industrial Average.

Posted by: AsperGirl | September 29, 1908 3:25 PM | Report abuse

Posted by: Kate | September 29, 2008 2:43 PM

You clueless, pie-in-the-sky left wingers are the ones who are naive. This crash has been coming for a long time.

Kate, with all due respect, we leftwingers are not all to blame. Many of us were against the wording of this bill and wanted this one defeated. They need to go back and work a little harder and protecting the American people, including eliminating language that provides loopholes for the super rich.

Rightwingers are just as much to blame.

Posted by: Anonymous | September 29, 1908 3:26 PM | Report abuse

"Yes, it was due to all those student loan defaults.

Get a clue. Why don't you do a little background reading before you start posting commentary on other people's opinions and ideas?"

So you really believe that this whole crisis was directly caused by failing to properly regulate Fannie and Freddie (which I agree was part of the problem) and had nothing to do with the Gramm-Leach-Bliley Financial Services Modernization Act as well as a general look the other way deregulation philosophy of the administration.

Also it is not as if the Democrats had any filibuster power or chaired any committees until January of 2007. If the republicans could not get a bill passed is is likely that several Republican legislators voted against it.

Cheers,
james

Posted by: James | September 29, 1908 3:28 PM | Report abuse

"The largest one-day point drop in DJIA history occurred on September 17, 2001, the first day of trading after the September 11, 2001 attacks, when the Dow fell 684.81 points, or 7.1%. By the end of that week, the Dow had fallen 1,369.70 points, or 14.3%. A recovery attempt allowed the average to close the year above 10,000." -- Wikipedia

The Dow is down more than 700 points now.

Posted by: AsperGirl | September 29, 1908 3:28 PM | Report abuse

"So you really believe that this whole crisis was directly caused by failing to properly regulate Fannie and Freddie (which I agree was part of the problem) and had nothing to do with the Gramm-Leach-Bliley Financial Services Modernization Act as well as a general look the other way deregulation philosophy of the administration."

Posted by: James | September 29, 2008 3:28 PM

Social programs were forced onto the banking industry by Democrats to promote minority and poor home ownership. Subprime mortgages, Fannie Mae & Freddie Mac are government interventions into the mortgage banking and financing sector, to promote social agendas.

During the Clinton Administration, banking & finance deregulations and acts (including those pushed by Phil Gramm) (1) repealed the separation between commercial & investment banks (Wall Street), (2) created commodity trading loopholes, (3) deregulated banking & finance, (4) prohibited federal oversight of certain financial derivative products and so on. Republican Phil Gramm was pushing the deregulation, and it was also in like with Clinton's focus on financial gimmicks to produce the illusion of growth. The tech stock bubble from the Clinton years morphed into the real estate bubble during the Bush years, after it burst and after Wall Street cooked up credit default swaps in the environment created by Clinton's banking and finance law changes.

We are also sending a lot of money abroad, because of our energy dependence and our global trade imbalances. We are sending huge, unprecedented money abroad that is coming back to us in the form of easy investment money (a "liquidity bubble"). The international hedge funds & sovereign wealth funds that were eager to buy credit-backed derivative products, got their money from our overspending obscene amounts abroad on credit via our trade deficit.

In the past few years, using the credit default swaps and other crooked, fancy products cooked up after Clinton's banking & finance deregulations, Wall Street figured out how to make subprime mortgages and Fannie Mae and Freddie Mac products profitable, instead of a burden. By creating derivative products that hid and misrepresented the risk in their bad mortgage-backed portfolios, Wall Street turned subprime mortgages and Fannie and Freddie into a big source of undue profits.

It is unwise to make racial discrimination ("subprime") mortgage lending a part of our banking industry requirements. It's government forcing weakness into the backbone of our economy. Subprime mortgage requirements and other low-income home ownership programs should be kept separate and distinct from the banks. It would be better for the government to outright fund charity to promote minority home ownership, than forcing banks to make subprime mortgages or empowering Fannie and Freddie to hype poor mortgage portfolios as reliable financial investments. The social programs should be kept apart from our banking core of our economy, if the vulnerabilities they create can take down our national economy.

The banking & finance deregulation during the Clinton Administration allowed greedy and self-serving Wall Street gamblers to leverage the weaknesses in our banking system created by these government-mandated home lending programs into a big payday.

Wall Street, what we know of as investment banking, is no longer really necessary in the global economy of today, in the form that it exists. The fact of it having turned into a predator of economy in the past 3 decades, instead of a constructive part of it, means that the business model of Wall Street is no longer constructive.

Let them fail. Trying to bail them out (1) won't work and (2) will squander a lot of time, money and attention so that the inevitable outcome will be worse.

Posted by: AsperGirl | September 29, 1908 3:47 PM | Report abuse

This is a VICTORY for DEMOCRACY and a DEFEAT for SOCIALISM!!

CONTACT YOUR REPRESENTATIVES -

The People of this country have spoken. The bailout legislation has been defeated. We oppose the bankers' bailout. Backroom arm-twisting is an unacceptable hijacking of democracy. WE WILL NOT ACCEPT any vote change in favor of the bailout.

------------------


Let the financial chips fall where they may and let the market corrections occur and if the consequences for the American public are dire, WE ARE A STRONG PEOPLE, let us shift through the ashes and rubble of their greed and the excess created to determine how and why this happened. Let Congress use their investigatory power to launch inquiries to determine who should have their assets seized and who is going to prison for this treachery.

This monopoly game is over. It is time to enforce the rules and start over. It is time for many of those in high places to go to jail!

Posted by: Anonymous | September 29, 1908 3:57 PM | Report abuse

Dow is down more than 770 points today. Biggest one-day drop ever.

Posted by: AsperGirl | September 29, 1908 4:18 PM | Report abuse

Posted by: AsperGirl | September 29, 2008 3:47 PM
It is unwise to make racial discrimination ("subprime") mortgage lending a part of our banking industry requirements. It's government forcing weakness into the backbone of our economy. Subprime mortgage requirements and other low-income home ownership programs should be kept separate and distinct from the banks. It would be better for the government to outright fund charity to promote minority home ownership, than forcing banks to make subprime mortgages or empowering Fannie and Freddie to hype poor mortgage portfolios as reliable financial investments. The social programs should be kept apart from our banking core of our economy, if the vulnerabilities they create can take down our national economy.
---------------------
Well, now, Aspergirl, I guess we know your agenda. Just an FYI, many of those mortgages were obtained by flippers who used these funds to buy homes and flip them and underpaid white families. So now, because you have no further logical argument, you are playing the racial, minority card. Put some Aspercreme on and get over it. That is always the mantra of the rightwing republicans when they start to whine. Yes, it was all the problems with minority lending that caused these problems, not the rich white republicans who set it up.

We are in the 21st Century right, or is it still the late 1860s?

Posted by: Constance Avery | September 29, 1908 4:46 PM | Report abuse

Although I did not hear Ms. Palosi's comments, I do find a bit surprising that any vitriolic made in congress could hurt so many feelings that it killed the deal. I guess D.C. is not the tough place of which I have heard. That is OK, when they see what happens in the overseas markets tonight, I think Nancy is going to come out sounding like a sweetheart.

--------

Posted by: Michael F. Taylor | September 29, 1908 7:17 PM | Report abuse

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