The Bail Out measure that the Bush administration says is absolutely necessary has failed in the House with a vote of 205-228. The vote did not go down party lines, particularly. The yes votes were made up of 160 Democrats and 65 Republicans while the no votes were made up of 95 Democrats and 133 Republicans. The roll call is here.
The Indiana Delegation was split, but not strictly along party lines. Donnelly (D IN-02), Souder (R IN-03), and Ellsworth (D IN-08) voted “yes.” Voting “no” were Visclosky (D IN-01), Buyer (R IN-04), Burton (R IN-05), Pence (R IN-06), Carson (D IN-07), and Hill (D IN-09).
The Dow Jones is down approximately 600 points as I type this. So, the reaction on Wall Street is what I would call “negative.”
The Visclosky and Souder votes surprised me — I would have expected the opposite from them. I hope Souder’s opponent hammers him!
Interestingly, Souder was one of the few Republicans who didn’t vote to impeach President Clinton…
I really wish I knew if this is a good thing, in the long term.
I wish even more that I trusted anybody in Congress to know, one way or the other.
I’m with you there. On a visceral level, I want to stomp my feet and tell the banks to go to hell and watch them burn. On a more cerebral level, I recognize that there is the very real possibility that this is cutting off the nose to spite the face.
Jus’ sittin’ here along Main Street waiting for the sky to fall…..waiting….wai….ting….ever here anymore about that y2k thing?
Best one-line comment about bailout bill failure heard today on CNBC,the business channel: ‘The day started out with Main Street hating Wall Street, and now the feeling is mutual’
The feeling was that neither Main St nor the House understands the seriousness of the situation and re-election politics was the only motivator.
Tom,
y2k was solved by the hard work of many, many people, including me. The best way I can explain it is that it was a simple fix, like putting tape on a chair. Now imagine that you had to fix every chair in the world. That’s what we did, no one person solved it all but many did a lot of work.
Sorry to make a big deal out of it, but after all the late nights I spent working on that, it pisses me off when so many people blow it off like it wasn’t a big deal after all. When IT does their job right, no one notices it at all. We did it right.
This Charlie-Foxtrot of a banking screwup was caused by far less people.
I really want to the banks burn. This is a free market, someone will buy them. When the price is low enough, another bank will buy the assets. We have already seen this in action.
To use one of Doug’s funnier lines, “This is a bed that can’t be un-shit”.
The damage has been done, and getting loans will be very hard for people that are not qualified, with or without a bailout. All we’re doing now is trying to shore up stock price, but in a really screwed-up way.
Honestly, I think this bailout is the corporate version of the economic stimulus check that we’ve tried a few times and has not work. The government can’t buy our way out of this, period.
This is NOT cutting off the nose to spite the face. This is actual justice: Make bad decisions, fail. Make sound decisions, succeed. This may hurt short term, but is WAY healthier long term than subsidizing and forgiving unsound decision making.
Jason nails this. The honest people are getting hosed right now, because credit for honest people is tightening up, thanks to the dishonest. And, when hollow assets are overvalued, sooner or later, people stop buying them. When the prices come back in line with reality, people will start buying them.
Now all we have to worry about is the follow-up bailout proposal. In the meantime, kudos to the House Democrats and House Republicans who stood on the side of reason, and against the Administration’s manufactured panic.
It all depends on how severe the collateral damage is, if any. Certainly justice is not served if the guilty are not punished for their wrongdoing. But, justice is also not served where the innocent suffer where they did no wrong. We’ll have to wait to see what the relative balance ends up being between the former and the latter. I suspect, as always, life will be like a shit sandwich: it tastes better when you have more bread.
Apologies Jason….didn’t mean to diminsh your efforts although I think that, while a complicated fix, the dire predictions were a bit overlblown…I should have picked Killer Bees as my example….
At any rate, we agree on this crazy bailout. I can not for the life of me understand the herd in Washngton once again being stampeded by the Bush cowboys who have lied so often.
The problem is that we’re having a credit contraction — small businesses can’t get loans, individuals can’t get loans or credit.
This bill was supposed to fix THAT – the credit problem. Not pay off Wall Street. The label “bailout” is a misnomer. What’s needed is causing the credit contraction to expand.
What’s going to happen if SOME type of bill doesn’t pass is that small businesses are going to start laying off, or failing altogether. Job losses, income problems, people losing their homes.
We do need re-regulation of the banking industry, but FIRST we need to triage the large, gaping wound in the economy.
Call me skeptical, but has anyone out there actually seen examples of, know of, or spoken with any small business people who are currently in deep shit because of this? Is my little corner of northeast Indiana totally insulated from the horror stories?
I suspect a lot more hype than reality, I’ve been through some pretty tumultuous economic ups and downs and survived. The late 70’s comes to mind vividly when I had three new spec homes sitting and interest rates were 18%.
We’ll survive this as well, without an additional $700 billion boondoggle.
If it isn’t to bailout companies, then the check should go to those that can’t pay the loans off. The problem would be solved two-fold: the people get to save their personal credit from going under, and the lenders will get their loans paid off.
However, sending the check to the banks direct does not prevent them from still being stingy with credit. The small businesses that need credit may still get denied, bailout or not.
There is no clause (that I know of) that says “If we give you this money, you can’t be jerks about giving credit out”.
The National Federation of Independent Business (NFIB), which represents a host of small business in the country recently surveyed its’ members to see how they were dealing with credit issues. Only 2% listed getting credit as their #1 issue.
http://www.washingtonpost.com/wp-dyn/content/article/2008/09/25/AR2008092504155.html?sid=ST2008092600236&s_pos=
I disagree, though, that we need more credit. Loose credit is what begat the failure of a few large institutions. As the chairman of a small bank said- if having trouble getting a loan, go to a smaller bank. Or, as he didn’t say, one should get their credit fundamentals in order.
Doug, the shit sandwich does NOT taste better with more bread. It tastes less bad. Better than that, though, is not eating shit.
Let those who made their mistakes eat their shit, and spare the rest of us as best as possible. Jack up my taxes to rescue the stupid and/or criminal hurts me. It takes money out of my children’s college fund.
What Mike said!
Maybe we should pour the money into infrastructure. Have the people who were building unneeded “investment homes” build bridges and revamp the grid instead. Have them build wind farms and solar farms. Make friggin’ lemonade out of this massive lemon of an economic and banking meltdown we’re facing. Don’t just prop people up until the next time, when the problem will be even bigger.
Look, investment losses suck. I did what I was told and set aside money in a diversified portfolio when able, and am looking at 50% paper losses right now. But I don’t need the money right now. I’ve grown used to the fact that the last several years have basically been wasted time that won’t be recovered, investment and compounding-wise. Who would have guessed that even money market accounts would be suspect? So, yeah, being one of those who was doing it right and getting run over because people created a bubble in an orgy of ridiculous speculation feels bad right now. But the proposed solution is too high a fee just to make stocks more expensive, or credit more free, or whatever.
This crisis could and should cause a real paradigm shift. Those affected might have to form some kind of migrant workforce to construct infrastructure like in the 1930’s. But why not go for greatness here? If we’re going to get hit with higher taxes (eventually), why not shoot for upgraded transit, massively expanded alternative energy in order to get a return by reducing energy costs, etc?
Let’s start actually building things, like we used to.
Can you imagine what $700B would buy in terms of alternative energy and mass transit?
But aren’t you all still talking about some form of government intervention, just discussing the many possibilities of what that could be? That, I think (?) was my point. I think. I admit, this is all way over my head.
Yes, absolutely. The question is whether the government (the taxpayers) just give out money, or whether we buy something. On its face, buying assets for more than their selling price is just dumb. Yeah, eventually they might regain their value. But if that’s the case, then they’ll do even better for us if we buy them at the rockbottom price.
The original plan was to buy assets at near their “maturity” price with no oversight, and was written on three pages, with a $700 billion price tag. With many mom and pop longterm investors down five and six figures after lifetimes of work, such an obvious non-starter suggestion could have reasonably led to the following response: Lining the guy up and shooting him, then asking the next person making a proposal to be *serious*.
That’s another point, then, that is getting lost in all this. Loud Dobbs is busy celebrating the defeat of the bailout bill. But if you’re reading closely, he’s saying there still needs to be some legislation, just different than the “crap sandwich” that Bush’s bill delivered.
That’s not what the average American is hearing, though – they’re hearing that any intervention is “socialism” and no action on the part of government is required.