700 billion dollar rescue bill rjected ( Archived) (129)

Just what happened here? I thought there was enough wrangling over some protection for the American people in the plan so it wouldn't be a total bail out of wall street. Wasn't it going to have enough accountability already?

Here's the Roll Call: Democrats backed the bailout by 140 - 95 votes, or roughly 60 - 40. Republicans opposed it by 133 to 65, or 67 - 33.

Democrats and Republicans are pointing the finger of blame at each other. Republicans have said that the Democrats' partisan tone is the reason the GOP couldn't get enough votes on their side. Democrats scoff at this, saying it's ludicrous that hurt feelings prevented Republicans from voting yes.

U.S. stocks plunged and the Standard & Poor's 500 Index tumbled the most since the 1987 crash after the House of Representatives rejected a $700 billion plan to rescue the financial system.

"We've completely decimated confidence in the markets,'' said James Dunigan, managing executive of investments at PNC Wealth Management, which oversees $66 billion in Philadelphia. ``I appreciate their wanting to be a watchdog. On the other hand, if the kitchen's on fire, you don't want it to spread to the rest of the house.''

Global stock markets braced for a sharp declines on Tuesday, with Asian markets getting hammered in the morning session. The failure of the bailout bill—after more than a week of intensive closed-door negotiations intended to hammer out a compromise plan—brought new uncertainty about the response of the U.S. government to the worst financial crisis since the Great Depression.

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The final version of the bill included a deal-sealing plan for eventually recouping losses; if the Treasury program to purchase and resell troubled mortgage-backed securities has lost money after five years, the president must submit a plan to Congress to recover those losses from the financial industry. Presumably that plan would involve new fees or taxes, perhaps on securities transactions.

The deal would also restrict gold-plated farewells for executives of companies that sell devalued assets to the Treasury Department.

House Republicans had threatened to scuttle the deal, and proposed a vastly different approach that would have focused on insuring troubled debt rather than buying it. In the end, the insurance proposal was included on top of the purchasing power, but there is no requirement that the Treasury secretary use it, leaving them short of that goal.

Congressional leaders stressed that it would likely be far less than $700 billion. Because the Treasury will buy assets with the potential to resell them at a higher price, the government might even turn a profit.

That provision, pushed by House Democrats, was the last to be agreed to in a high-level series of talks that had top lawmakers and White

The bill calls for disbursing the money in parts, starting with $250 billion followed by $100 billion at the discretion of the president. The Treasury can request the remaining $350 billion at any time, and Congress must act to deny it if it disapproves.

Senator Judd Gregg of New Hampshire, the senior Republican on the Budget Committee and the lead Senate negotiator, raised the prospect of an economic catastrophe.

“If we don’t pass it, we shouldn’t be a Congress,” Mr. Gregg said.

A series of business-oriented trade associations with influence with Republicans also began weighing in on behalf of the plan.

Members of the conservative rank and file remained unconvinced.

One of the more contentious issues was how to limit the pay of executives whose firms seek government aid, a top priority for Democrats and even some Republican lawmakers. But it was a concern for Mr. Paulson, who worried about discouraging firms from participating in the rescue plan, which seeks to convince companies to sell potentially valuable assets to the government at relatively bargain prices.

In the end, they settled on different rules for different companies depending on how they participate in the bailout. Firms that sell distressed debt directly to the government will be subject to tougher pay limits, including a mechanism to recover any bonuses or other pay based on corporate earnings that turn out to be inaccurate or fraudulent, and a ban on so-called “golden parachute” severance packages as long as the government has a stake in the firm.

Companies that participate in auctions, or other market-making mechanisms, and sell more than $300 million in troubled financial instruments to the government, will be barred from making any new employment contract with a senior executive that provides a golden parachute in the event of “involuntary termination, bankruptcy filing, insolvency or receivership.”

While some critics said the limits did not go far enough, lawmakers described the provision as a historic first step by Congress to limit exorbitant pay of corporate titans. “I think we wrote it as tight as we can get it in here,” Mr. Dodd said.

At one point, Senator Charles E. Schumer, Democrat of New York, was thumping the table, demanding to release the $700 billion in installments. At another point, Senator Max Baucus, Democrat of Montana, was shouting at Mr. Paulson, accusing him of trying to undermine the limits on pay for executives.

Now, the financial recap will follow or perhaps not thanks to credit card companies what may spare people from deliberate failiure.

It depends on many interests of which very few are trully for the sake of this nation. Not to forget that main recession in USA already went through during past 7 years.

Sorry folks

This stuff is most likely as well pre election action to stimulate/confuse people to even go out there and vote....ypppp....gov. is affraid that nobody will come to vote at all.....

I'm sure there are lots of politics involved as per my last posts but the Stock Market is Crashing, the world marked is trembling in sympathetic nosedives and the trickle down effect is gonna scr** us all.

It all goes to show that when the chips are down there is no such thing as complete "free enterprise" or the "private sector"......the Government is called on to help when things get rough and despised when things are good. All the people on here who believe that the Government never did anything for them and that proper health care is communism!!! Their views underpin the market philosophies that have now imploded.

Oh, I think the government does things to help me...but I also think they do things that don't help me.
When weighed...I tend to think I come out on the short end of the stick.

Not sure national health care is causing any implosion.

Mixed up economy more like.