House Defeats Wall Street Bailout Bill

[DonMoose 3]

WASHINGTON — Stocks spiraled downward as much as 685 points on Monday as a $700 billion bailout of Wall Street ended in defeat in the House of Representatives.

http://www.foxnews.com/story/0,2933,430021,00.html

WOW! Very shocked to see that.

[RWC130 594]

I'd like a Bailout Package!

I won't be greedy,

about $1.5 million please!

Thank You

[ajsbear 11]

The market dropped tpday 778 points.

While it wasn't popular some one has to come up with a realistic plan. More banks will fall. We've been lucky that the big ones have been gobbled up by other big banks but as soon as the mid size banks start failing in numbers the FED will be the only one picking up the pieces. As the banks and investment houses go belly up the FDIC and SIPIC will cover the payouts and the government will end up paying out a good portion of the $700B anyway. The big difference will be more lost jobs, more people losing everything and more companys going belly up.

Edited September 29, 2008 by ajsbear

[FFPCogs 863]

I too am shocked by the news. So who will be the first candidate to say they didn't want the bailout after all?

I can honsetly say I never liked the idea of the government bailing out business. To me it amounts to white collar welfare, and like welfare it is us..the middle class...who would bear the brunt of it. That money would have disappeared into a black hole never to be seen again by the taxpayers. It is those greedy financial firms and banks whose lending methods led to this mess that should face the consequences of their actions. Like a child who gets their pee pee spanked for whipping it out in public. Unfortunately, it is WE the regular middle class joes who will ultimatety be the ones that suffer most. To be fair though in our own ways we are partly responsible too. First we elected those official (Dem and Rep alike) that allowed the rampant speculation to grow. And second by choosing to live beyond our collective means. Living on credit will eventually catch up, and it seems to have done so in a big way all at once.

With any luck maybe we will all come out better for it in the end..although without doubt the road will be long and rough.

Has anyone heard of a plan B?

Cogs

[Jybehofd 85]

The market dropped tpday 778 points.

Here was the vote below. While it wasn't popular some one has to come up with a realistic plan. More banks will fall. We've been lucky that the big ones have been gobbled up by other big banks but as soon as the mid size banks start failing in numbers the FED will be the only one picking up the pieces. As the banks and investment houses go belly up the FDIC and SIPIC will cover the payouts and the government will end up paying out a good portion of the $700B anyway. The big difference will be more lost jobs, more people losing everything and more companys going belly up.

YesNoDemocrats14095Republicans65133Total205228

If that does happen where FDIC and SIPIC have to bail out the banks its going to take a LONG time for the economy to recover. The problem is when these federal insurances kick in it will be too late. the damage will be done and we will be well past a golden hour to actually fix the damage. It will be like falling down a hole without an end in site. I just want to know who the repersenatives have been talking too. and who convenced them to vote no I know it wasn't me ??? I am just wondering is there anyone who was not i favor of the bill and why?

[SageVigiles 1,194]

Ok, I'm going to get involved here, against my better judgement. I am EXTREMELY happy that the bailout plan was shot down.

Plain and simple, its not the governments job to regulate the economy. Free market economy, I'm fairly certain I read that in some important document somewhere.

Congress has alot of other avenues than giving the Secretary of Treasury a blank check to bail out whatever bank (including foriegn ones) he damn well pleased, which would have been irresponsible. For example, they could have raised the FDIC insurance level to greater than the current $100,000 limit. They could have also The arguement that the government could make money off these homes is rediculous. If banks couldn't sell these houses, what makes you think the Federal government can? Thats just stupid.

The Dow Jones drop today was scaremongering, an attempt by those controlling the markets to scare Congress into passing a bill that would save their failed careers. $700 billion dollars is pretty damned close to Marxist redistribution of wealth, and I don't know about you ladies and gentleman, but I'm no communist. If a company cannot make money, it should go out of business. Thats economics.

The problems with this mortgage crisis is irresponsibility on the parts of damned near everyone involved, but NOT the US Government. Banks gave mortgages to people they knew couldn't pay, and morons took out mortgages they SHOULD have known they couldn't pay. Its simple, you add up the money you make every month, and subtract your bills, and what you'd be paying for the mortgage. If you get a negative number, DON'T TAKE OUT THAT MORTGAGE.

Thank God there are still fiscal conservatives out there who are smart enough to see through this garbage... also, it should be noted, the vote was split between both Democrats AND Republicans, both parties had majorities voting no.

Edited September 29, 2008 by SageVigiles
bipartisanship

[ex-commish 490]

Has anyone heard of a plan B?

Put your money under your pillow...

[FFPCogs 863]

Put your money under your pillow...

Has been for some time now...

[smwells 7]

Who to Blame ??

1. Financial companies knowingly writing loans for people that could never afford the payments once the rates increased.

2. The people that took the loans knowing they could never afford it... Yes, I know some shady dealing went on in the industry, but you can't tell me 'everyone' didnt read the fine print on the loans... these people know what they signed and out right knew unless they hit the lottery they could not afford to buy the house..

And as stated above regardless of this bailout passing or not, the middle class is going to get screwed...

The ones that couldn't afford it before, got a 2-3 yr 'vacation' in a house that they otherwise could never have lived in.. and now the rest of us will be paying for the foreseeable future..

[DonMoose 3]

Ok, I'm going to get involved here, against my better judgement. I am EXTREMELY happy that the bailout plan was shot down.

Plain and simple, its not the governments job to regulate the economy. Free market economy, I'm fairly certain I read that in some important document somewhere...

Sounds like you were reading my mind - Couldn't have said it any better.

[Guest]

You can also thank the Clinton administration during the 90's as well as the Carter administration when these mortgage companies were more than encouraged to lend money out to those who could not afford them. The banks were scrutinized by federal regulators and told to diversify their lending portfolios or face public scrutiny and other restrictions. This forced banks to lend to those they would never have considered prior to this, and they gave large sums of money to groups such as ACORN who fought for housing rights for those who could not afford it. As recently as 2003 congress was warned, but democrats refused to listen and brushed it off as nothing to worry about and there was no need for regulation. You can easily access video of committee meetings in which the very democrats who are now working to "save the economy", are being warned about this and brushing it off as nonsense.

Edited September 29, 2008 by NYFire

[SgtGumby311 0]

Home Depot stock is up, people are buying shovels to bury their money in the yard...

[ajsbear 11]

Put your money under your pillow...

Who's got money?

[tdc202 0]

Well said Sage Couldn't have said it any better myself ............

[ex-commish 490]

In a way I am glad this bill was defeated. It seemed the greedy executives with thier million dollar salaries and bonuses would have been bailed out only to falter some time down to road leaving more debt to our kids and grandkids.

[abaduck 123]

I detect a depressing amount of politicking and schadenfreude in many responses. Here's the BBC analysis, and it's one which my wife (who works on Wall St.) agrees with:

"It is possible that the sense of global crisis may - perversely - offer a way out of this.

American voters simply have not seen this as a crisis that affects their real lives on Main Street - it is seen as a welfare scheme for the humbled plutocrats of Wall Street.

If the problems deepen and people suddenly see unemployment rising because businesses cannot get money from the banks to pay their bills and honour their payrolls, then that sentiment might change.

That is the optimistic assessment - that American lawmakers and voters having registered their pain and anger will eventually fall into line and give the US Treasury the money it wants.

The pessimistic assessment is almost too frightening to contemplate.

It is that a majority of members of Congress, backed by their voters, simply do not believe in a plan which basically involves the United States government borrowing hundreds of billions of dollars to prop up a financial system which is clearly deeply flawed.

If the warnings from US Treasury Secretary Hank Paulson are to believed, such a decision would usher in an age of catastrophe. "

Most people don't get it. America (people and corporations) are addicted to credit. The credit market is already pretty much seized up. If this continues and worsens, business goes to hell in a handcart. Ignore all the politicians, and watch the numbers. Look at the difference in interbank rates - overnight vs. 3M. That'll tell you where things are headed.

Me, I'm buying canned food and cleaning guns...

Mike

[pjreilly 6]

Put your money in the markets. There will be some very big profits to come. Obviously you need to do your homework, but some people are going to make a killing. Warren Buffett made 440,000,000 thats million, the first day after bailing out the company he bought out.

[ajsbear 11]

We'll see tomorrow how much the market drops overnight, then 6 1/2 hours of who knows what. If it takes another 700 plus point drop all hell could break loose. Credit could dry up. Who knows how far down to Mail street that may go. I could mean a lot of mid size business's can't get the goods they need and it could mean some more bank failures. Next we could see a lot of retail shortages. Then you'll see panic buying, just like the day before a storm. Auto dealers are going to be hurting when no one can qualify for loans. It could be a bleek end of year.

[SageVigiles 1,194]

reilly, I couldn't agree more, I wish I had money lying around to invest or buy up several of these foreclosed properties. Alot of people are going to make alot of money...

[DCurtis 1]

Shooting down this bail is good for the long term. Sure 700billion would stabilize the economy, but for how long? The market is finally coming back down to its true value. This is also good for our currency considering we wouldn't be pulling 700 billion in credit out of no where, if we did, our currency would be even weaker.

[FFPCogs 863]

I'm fairly confident that some kind of "deal" will be reached and government will devise some package to prop up the credit markets. And make no mistake it is the "addiction to credit" so eloquently noted by abaduck that is at the root of the problem.

Failure to "bail out" the financial sector, according to recent interviews with noted economist on ALL the networks/newspapers, will result in another "Great Depression". And I don't believe that the American voter is willing to suffer that possibility.

But in reality a "bailout" is a no win sitiuation.

Do give the money and taxpayers are on the hook for a long time to come and we begin to lean towards socialism, don't and banks and businesses will fail, revenues will drop and jobs will be lost...i.e. soup kitchens, shanty towns, "brother can you spare a dime"

Do and other corporations will be lining up for their share..airlines and energy being the two most likely to be next in line, then where does it end, don't and those industries fail with all the associated repercussions and dominoes.

And possibly worst of all: do and regardless of all the talk about oversight/regulation the flood gates will open and no lessons will be learned...and we can expect more of the same policies, greed and individual irresponsibility that caused this mess, don't and Americans will suffer to a degree unheard of except to the relative few who lived thru the Great Depression.

I'm a firm believer that WE got ourselves into this mess because of 1) our over-reliance on credit for EVERYTHING and 2) for all the finger pointing when it comes right down to it government is US..we put them there, ...therefore only WE can solve the problem. That that may mean a depression and it's associated depravations to force a fundamental change in the American way of life may be in the end the only TRUE fix.

But then again when it comes to the politics of Americans doing the right thing for Americans I'm a glass half empty guy..let's hope I'm wrong.

Cogs

Edited September 30, 2008 by FFPCogs

[abaduck 123]

To those opposed to the bailout, I would say simply this: when the treasury AND the fed both say 'do this or the economy is screwed' it should pass that same afternoon on a voice vote, not be dragged out for a week of playing politics with the future of the nation, and THEN voted down. To do so is tantamount to treason. Even in election season.

Mike

[SRS131EMTFF 471]

If anyone remembers back to history class, the reason for the "First" Great Depression was too many people buying too much they could not afford on, what else but, credit.

This country needs to come up with a few good answers really quickly, and this bail out package/bill is/was not the answer. The only answer is a change in market mentality, consumer trends and time.

I just hope that there is an end in sight and that I do not need to learn a new language in conduct business anytime soon.

[Guest]

I watched Newt Gingrich being interviewed last night being interviewed by Greta Susteren, and a lot of his points made sense to me...

Newt Gingrich on FOX News

GINGRICH: No. I mean, I think that he must have been a terrific deal-maker at Goldman Sachs and a great chairman of Goldman Sachs, but I don't think that's the same job as being a secretary of the Treasury. And I think the president would be much better off if Undersecretary Kimmet was now replacing Secretary Paulson. The administration won't like to hear that, but I think it's true.

One reason is that there's a step they could take tomorrow morning that would dramatically improve things with no congressional action, and that is to change the accounting rules that the Sarbanes-Oxley bill imposed on the system called "mark to market." It's a complicated issue, but I think it's so central to our future, Greta, that every American needs to understand. We adopted an artificial rule which drives down the price of everything in a period when prices are declining. So we artificially make it much worse for companies.

Both Chairman Bernanke and Secretary Paulson have indirectly admitted this when they said that they would pay two or three times the market value for paper because the paper is so dramatically undervalued. Now, that's a sign that it's the core accounting system that's wrong.

Two Chicago economists indicated on Thursday they thought this was 70 percent of the problem. That's $500 billion of the $700 billion that Paulson wants. The European central bank warned in 2004 that this would be a disaster, that you cannot do what we tried to do under Sarbanes-Oxley.

So my challenge to the administration is simple. Suspend tomorrow morning the mark-to-market requirement. Replace it temporarily with a three-year rolling average. You will overnight explode the amount of liquidity on the street. Companies will immediately have relief all across America. It will be a stunning effect. And you will have bought plenty of time to now think through in a better way what was so badly designed by Secretary Paulson and that, frankly, could not be salvaged.

[ajsbear 11]

Some eof you have made some great points both for and against the bill but look at it this way, there are 2 factors.

1 way too many people have bought homes that really can't afford them and got in way over their heads in the sub prime market. There are those who bought with no or little money down at the height of the market. Those houses are now worth less then the mortgages. Then there are the adjustable rates where the payments have jumped to a point the homeowners can't afford them and also the third catagory where they had balloon notes paying interest only and those houses are also worth less then the notes.

Now look at business. You supply goods, either to retail or to manufacturing that makes the final goods or you're somewhere down the line. YOu buy on credit, supply your customer then when they pay you pay. What happens when you can't get the 30 day float to keep up production? Retail is already down.

You can't make payroll what happens? You start cutting that's what. Jobs are lost, therefore tax revenus are down. They are already down in NY thanks to Wall Street.A lot of large firms are already putting freezes on hiring. My firm with 8,000 US employees has done that and there are starting to really look at expenses. How many others are too. Those are the easy cuts and we're not a manufacturing company, we're software and services.

Just my 2 minutes on economics. Now take a few minutes to watch this youtube video then you decide.

What brought about the Bank and Wall Street Failure and who were the leading players causing the failure. It just didn't happen overnight as Congress and the media want you to believe. Click on: http://www.youtube.com/watch?v=H5tZc8oH--o

[Guest]

Your youtube video is no longer available.

Care to give us the Cliff's Notes?

[ajsbear 11]

Your youtube video is no longer available.

Care to give us the Cliff's Notes?

That's too bad. It went through newspaper articles from well known newspapers and web sites like Market watch. It gave info on who got sweetheart loans and went back to the Carter admin. How Fannie mae and Freddi Mac forced the "Sub Prime" market on the banks and how it just grew a life of its own. Unfortunitly the background music was a copywrite problem. I wish they'd still pay it without. I went back into the archives and found the articles did in fact exist but didn't save any of it.

[ex-commish 490]

Put your money in the markets. There will be some very big profits to come. Obviously you need to do your homework, but some people are going to make a killing. Warren Buffett made 440,000,000 thats million, the first day after bailing out the company he bought out.

While that sounds good lets not forget Mr. Buffet could afford to play with money like that. How many of us civil servants are willing to gamble with money in our defered comp? Not me. I was in all agressive funds untill this past February and will stay there for now. Call me chicken but I am too close to retirement to gamble.

[FFPCogs 863]

Folks,

WE are to blame, the American obsession with material possesions is to blame, the buy now pay later mentality for everything from homes to gas and groceries is to blame. belief in advertising that says you need item X when in reality you don't is to blame, speculation and greed both personal and corporate are to blame, the view of many that what you "own" defines who you are is to blame, irresponsible fiscal policies again both personal and business wise are to blame, corruption and ineptitude on the part of our elected (and re-elected) officials that WE put there is to blame, ignorance of where our money really goes is to blame...get the drift?

Bail out or not we're FU*ked. A government "loan" may clear the current hurdle, but only fundamental changes of the American consumer to a more prudent and responsible lifestyle will SOLVE the problem in the long term. When 5% of the world's population consumes 25% of it's oil resources there's a problem, and this same gluttony extends to every facet of American consumerism.

And for all the recent talk of "golden parachutes", they have been around for years. It is the shareholders of those companies who approrve them...and as for the CEO's ...who among you would turn down such a payout?..I can honestly tell you I wouldn't..hey it's the American way...get yours and screw the other guy right...a mentality by the way which is also to blame.

Cogs

[exmrvfc 0]

There are two things to be concerned with the current crisis:

For those that work in the public sector whether in emegency services/school or city hall, times are about to get tough. Don't be suprised when the vacant positions don't get filled and departments are asked to cut back on budgets as a tax receipts start to drop and state funding begins to dry up. For those that work in the private sector, times will get tough as well. The Wall Street model has forever been changed. Two investment banks have failed, two major banks in the area have failed and Merrill Lynch was acquired. All of this consolidation means that jobs will be lost. NYS estimates that could be 30,000 lost jobs. All of these people spend thier money in the tri-state area. Guys on this board who have B jobs as contractors may see things getting a lot slower over the 12 months. DPW guys who do landscaping on the side may see accounts start to drop. Delis will get slower as people brown bag more. Restaurants will see less demand as people stay home. This is not meant to be a scare tactic but merely to show the ripple effects that are likely to happen. As people cut back spending, the economy stalls, people lose jobs and sales and income tax receipts fall. This is serious stuff.

The larger picture is not the stock market falling 700 points but the credit market siezing like an engine without any oil. The entire economy is dependant on credit (which is a good thing) to function smoothly and ease any momentary shortfalls in cash flow. Right now banks are not willing to lend to other banks due to fear (see the rise in the LIBOR spreads which cover the loans banks make to each other). The Commercial Paper market which makes short term loans (say 30-90 days) to corporations is virtually dried up. Corporations use this money smooth out ups/downs in their cash flow on a regular basis. Credit also allows companies to buy the raw materials needed to manufacture the goods they make. Credit allows companies to start up or expand their business or get them through a slow period while still keeping employees and factories open. Imagine if overnight, your oil delivery company stopped mailing a bill and expected you or your spouse to pay them $500 cash on the spot or they won't deliver. Credit is the oil in the engine of our economy and right now we are about 4 quarts low. Everybody is arguing over who should put in the oil while the engine is siezing. The only thing that has prevented a complete meltdown has been the Hundreds of Billions in liquidity that the Fed has pumped into the system (something that wasn't done prior to the Depression).

Most of the people on this board are from the Tri-State Area and have more skin in this game than they realize. I am not a Wall Street guy and I don't expect my job to be saved or a fat cat bonus from a bailout (now being called the Rescue Plan). I am realist that things are bad and people need to get educated as to what is really going on. Something needs to be done and that is where the debate starts. I am not here to argue in favor of the plan but in favor of action. The Great Depression was brought by inaction (failure to prevent the bank runs) and bad action such as the Smoot Halley Tariffs which made the problem worse. my two cents which is now 1 due to a bad market.......