Something close to panic developed in the nation’s financial and trading institutions Monday after the U.S. House of Representatives defeated a bi-partisan bill enabling the federal government to buy up $700 billion worth of suspect Wall Street securities. The failed measure had been a last-ditch bid to stabilize the economy.
Substantial numbers of both Democrats and Republicans joined in resisting the call from leaders of both parties as well as from President Bush, who expressed himself as “extremely disappointed.” The measure started out with a brief lead but lost ground as the tally continued.
Voting no were 133 Republicans and 95 Democrats. The final tally was 228-205, with 65 Republicans joining 140 Democrats in voting yes. Among area members of Congress, Reps. Steve Cohen (D-9) and John Tanner (D-8) voted yes, while Marsha Blackburn (R-7) voted no. (Cohen’s remarks on the bill can be accessed here.)
Partisan flare-ups
No word as of yet on when a re-vote might occur, but apparently no new vote was scheduled for Monday. And no votes were likely until Thursday because of the intervening Jewish holiday Rosh Hashanah. Earlier reports had it that Jewish members were being subjected to arm-twisting to remain in Washington.
Reportedly the Democratic and Republican leaderships had briefly caucused together after the vote in an effort to determine what the next move is.
Appearing subsequently before the media in a post-vote press conference, Republican leader John Boehner (R-OH) and other GOP members blamed House Speaker Nancy Pelosi (D-CA) for alleged “partisan” remarks in speaking for the bill.
Pelosi and other Democratic leaders, in their turn, denied the charge, saying, in Pelosi’s words, that they had lived up to “our side of the bargain.” She added that Republicans had “clearly” not reciprocated but that Democrats would continue to reach across the aisle to enable “another bite of the apple,” i.e., a new solution to the ongoing crisis.
President Bush issued a brief statement just before the closing of the New York Stock Market, saying he would renew the effort to “find another way forward.”
Adverse economic consequences
In the immediate aftermath of the House vote, Wall Street prices plunged by record numbers, closing with a loss in the Down-Jones average of almost 800 points.
Credit markets were said to be frozen, meaning that transactions between financial institutions were limited or impossible. Investors were reportedly transferring their funds to low-yield, high-security Treasury bills for safety’s sake.
Speaking to reporters at the White House late Monday, Secretary of the Treasury Henry Paulson, primary drafter of the bailout plan, said he was “gravely disappointed” by the plan’s failure in the House. Paulson noted that two more financial institutions — Washington Mutual and Wachovia – suffered a “collapse” this week, along with the failure of two unnamed financial institutions in Europe. “Families, too, will be affected as they find it difficult to get car loans or student loans,” said Paulson.
Contending that something like the defeated bill was necessary to hold back falling dominoes resulting originally from insufficiently secured sub-prime housing loans , Paulson said, “Our tool kit is substantial but insufficient.” But he pledged to work with Congress to find a means of “limiting the prospects of further deterioration in our economy.”
McCain, Obama reactions
Republican presidential candidate John McCain appeared before reporters late Monday and said, among other things, “I share the anger and frustration that many Americans feel toward reckless and corrupt mismanagement on Wall Street and in Washington.” McCain made reference to his surprise “suspension” of campaign activities last week, when he returned to Washington as a response to the gathering economic crisis.
He said he had then “laid out principles I thought should be adhered to” in fashioning a bill. Some of those related to transparency, taxpayer protection, and limitations on CEO payouts. “I also thought that the legislation should have no earmarks.”
It was time, McCain said, “for all members of Congress to go back to the drawing board” and “leave partisanship at the door.” He proceeded directly from that to this reference to Democratic presidential candidate Barack Obama: “Senator Obama and his allies in Congress infused unnecessary partisanship in the process. Now is not the time to fix the blame. It’s time to fix the problem.”
Bill Burton, a spokesman for Senator Obama’s campaign, had meanwhile responded this way to similar statements evidently made earlier by the McCain campaign: “This is a moment of national crisis, and today’s inaction in Congress as well as the angry and hyper—partisan statement released by the McCain campaign are exactly why the American people are disgusted with Washington.
“Now is the time for Democrats and Republicans to join together and act in a way that prevents an economic catastrophe. Every American should be outraged that an era of greed and irresponsibility on Wall Street and Washington has led us to the point….”
Speaking in Denver, Obama himself would say, “Now is not the time for fear. Now is not the time for panic.” And he returned political fire. “This is the consequence of eight years of irresponsibility,” he said, “and it is time we had some responsibility in the White House.”
Obama said the administration had started off asking for a “blank check” on the requested $700 billion, “and I said ‘absolutely not.'” He promised, “If I am president, I will review the entire plan on the day I take office, to make sure that is working to save the economy and that you get your money back.”
More details as they are learned.
–Jackson Baker, from news sources