WASHINGTON, Sept. 30, 2008
Senate Schedules New Bailout Vote
Revised Plan Will Be Considered Wednesday; Wall St. Rebounds One Day After Historic Loss
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Rolando Gamez sweeps up litter on Wall St. in front of the New York Stock Exchange, Sept. 30, 2008 in New York. (AP Photo/Mark Lennihan)
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Traders Anthony Alvarino, left, Ed Curran, third left, and Steve Schnibbe, right, share a laugh on the New York Stock Exchange floor, Sept. 30, 2008. (AP Photo/Richard Drew)
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In a stunning vote that shocked the capital and worldwide markets, the House on Monday defeated a $700 billion emergency rescue for the nation's financial system, ignoring urgent warnings from President Bush and congressional leaders of both parties that the economy could nosedive without it. (AP Photo/Susan Walsh)
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Rep. Todd Platts, R-Pa., is cheered by demonstrators after he informs them he will cast a "no" vote on his way to vote on the financial bailout package Monday, Sept. 29, 2008, on Capitol Hill in Washington. (AP Photo/Lauren Victoria Burke)
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Senate Banking Committee Chairman Chris Dodd, D-Conn., left, and Sen. Jon Kyl, R-Ariz., right, hold a news conference on the failed vote in the House of Representatives on the financial bailout package on Capitol Hill in Washington, Monday, Sept. 29, 2008. (AP Photo/Susan Walsh)
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The Heat Is On
With no new financial bailout deal in place and Congress in recess to observe Rosh Hashanah, the pressure intensifies to reach an agreement as Election Day draws near. Bob Orr reports.
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Credit Freeze Hard On Wall St.
Although the Dow enjoyed a comeback, many on Wall St. are on edge because the credit markets remain frozen. Anthony Mason reports.
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Notebook: Congress Breaks
Congress has taken a break for the Jewish New Year and that is probably a good thing, says Katie Couric. During the recess, behind-the-scenes negotiations can take place on the bailout bill.
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Credit Crunch
Feeling the squeeze? Here's a look at actions and statements from key players in Washington.
The goal is to net at least 12 more House votes than the rescue proposal received Monday, when lawmakers rocked the political and financial worlds by rejecting it.
The gambit is certain to anger some conservative House Democrats, who object to tax cuts that are not offset with spending cuts. But Senate strategists assume it will gain more House votes than it will lose.
If so, Congress would be poised to pass landmark legislation giving the government billions of dollars to buy deeply discounted mortgage-backed securities that are choking off credit and roiling the markets.
The strategy is risky because some House members might see it as a high-handed move by senators. Senate passage of a bailout measure has seemed assured all along. The showdown is in the House, but now the Senate is trying to force the House's hand.
Sen. Charles Schumer, D-N.Y., called it "a brilliant move" that will "help pick up votes on both sides of the aisle."
House Speaker Nancy Pelosi's reaction was much cooler. "The Senate has made a decision about how to proceed and what can pass that body," the California Democrat said. "The Senate will vote tomorrow night, and the Congress will work its will."
The new approach, announced Tuesday night by Senate Majority Leader Harry Reid, D-Nev., and Minority Leader Mitch McConnell, R-Ky., would tack large and contentious tax measures to the bailout bill. Senate leaders figure the House will have to approve it because the tax cuts are too appealing to Republicans and the financial rescue plan will still seem essential to most Democrats.
The Senate approach uses big, game-changing amendments. House leaders earlier were considering the smallest possible tweaks to the bill in hopes of picking up 12 more votes. The previous compromise agreement met stiff opposition in the House, with many lawmakers facing fierce opposition to any bailout deal from their constituents.
Just a day after Republican Joe Barton helped kill the bailout bill in Congress, he returned home to his rural Texas district where he received support from his constituents, reports CBS News correspondent Bob Orr.
"I think we just ought to start over and come up with a plan that puts the taxpayer first," Barton told CBS News.
The Senate bill would raise federal deposit insurance limits to $250,000 from $100,000, as called for presidential nominees Barack Obama and John McCain only hours earlier.
House Minority Leader John Boehner, R-Ohio, praised the move, but many Democrats had signaled approval as well.
McCain, Obama and Sen. Joe Biden of Delaware, the Democratic vice presidential nominee, signaled plans to return to Washington for the Wednesday night vote. If Obama and Biden vote for the measure, it would make it more difficult for Pelosi and other Democrats to reject or change the Senate measure.
The Senate measure will graft the bailout language to a tax bill it approved last week, on a 93-2 vote. It includes: a provision to prevent more than 20 million middle-class taxpayers from feeling the bite of the alternative minimum tax, $8 billion in tax relief for those hit by natural disasters in the Midwest, Texas and Louisiana and some $78 billion in renewable energy incentives and extensions of expiring tax breaks.
(AP Photo/Charles Dharapak)
In a compromise worked out with Republicans, the bill does not pay for the AMT and disaster provisions but does have revenue offsets for part of the energy and extension measures.
That wasn't enough earlier this year for the House, which insisted that there be complete offsets for the energy and extension part of the package.
The Senate version also may include a measure to require health plans for 51 or more employees to give equal treatment to mental health or addiction if they cover such illnesses. The House and Senate have passed similar mental health parity measures, but none has gone to Bush for his signature.
The surprise move capped a day in which supporters of the imperiled economic rescue fought to bring it back to life, courting reluctant lawmakers with a variety of other sweeteners including the plan to reassure Americans their bank deposits are safe.
Amid Tuesday's negotiations, Federal Deposit Insurance Corp. chairman Sheila Bair asked Congress for temporary authority to raise the limit on deposits by an unspecified amount. That could help ease a crisis of confidence in the banking system, Bair said.
She said the overwhelming majority of banks remain sound but an increase in the cap would help ease a crisis of confidence in the banking system as well as encourage banks to begin more lending.
Monday's House vote was a stinging setback to leaders of both parties and to Bush. The administration's proposal, still the heart of the legislation under consideration, would allow the government to buy bad mortgages and other deficient assets held by troubled financial institutions. If successful, advocates of the plan believe, that would help lift a major weight off the already sputtering national economy.
Bush renewed his efforts to save the bailout plan Tuesday, speaking with McCain and Obama and making another statement from the White House. "Congress must act," he declared.
Though stock prices rose, more attention was on credit markets. A key rate that banks charge each other shot higher, further evidence of a tightening of credit availability.
The rescue package was Topic A on the presidential campaign trail.
"The first thing I would do is say, 'Let's not call it a bailout. Let's call it a rescue,"' McCain told CNN. He said, "Americans are frightened right now" and political leaders must give them an immediate solution and a longer-term approach to the problem.
Obama issued a statement saying that significantly increasing federal deposit insurance would help small businesses and make the U.S. banking system more secure as well as restore public confidence.
Wall Street Rebounds On Bailout Hopes
Wall Street snapped back Tuesday after its biggest sell-off in years amid growing expectations that lawmakers will salvage a $700 billion rescue plan for the financial sector. But the seized-up credit markets where businesses turn to raise money showed no sign of relief.
The recovery in stocks wasn't unexpected as carnage on Wall Street often attracts bargain hunters, though questions remain about how investors will proceed. Without a bailout plan in place to absorb soured mortgage debt and other bad loans from battered banks, investors are left wondering what might restore confidence in lending.
Major stock indexes were almost a sideshow during the session, with the credit markets as the main event. A key rate that banks charge to lend to one another shot higher, a tightening of the availability of credit that could cascade through the economy.
© MMVIII, CBS Interactive Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.
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See all 1152 CommentsGood going GOP for your regulations that begain with the fist banking mess yes that is right you right wing nuts still trying to make it look like Regan was so great yes if he were here now it would be the same.
YOU CAN NOT HAVE WEALTH THROUGH DEBT.
Stop being so dumb.
Screw the stock market. This is one time the big guys are going to get hurt more than the little guys. I don''t buy their scare tactics. They sure didn''t move this fast when the American citizenry demanded the wall, or that the borders be closed? That''s because the illegals hurt all of us, but not them. They like the cheap labor and don''t care how illegals affect our lives.
The majority of politicians don''t give a dam about the people. The now know that their jobs are at stake so they are weighing the value of their portfolios versus their pensions, perks, and connections.
No bailout!
It does not matter what holiday it is. If the country is in such a down spin Congress needs to continue to work on the problem, not spend a few days at home relaxing.
1) Help the average citizen...not just wall street.
2) Protect the American people with strict oversight
3) Provide a detailed payback plan with milestones.
4) Provide a stimulus package to help people with
their mortgages, create jobs, build infrastructure
better schools, better electricity service,
provide incentives for alternative energy
development, better healthcare and health
insurance, road and transportation improvements.
All these items will help the American PEOPLE...Thats what it is all about..... remember "WE THE PEOPLE"
The package in its original form was just another scam by the Bush Administration. This time they lost and for good reasons.
It does not matter what holiday it is. If the country is in such a down spin Congress needs to continue to work on the problem, not spend a few days at home relaxing.
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Posted by jjp735i at 08:06 AM : Sep 30, 2008
I tend to agree. They really tried to push this thru awfully quick without a lot of time for people to look at the deal. I''ve always been suspicious of salesmen who say this deal is only good today.
Should not be about politics, although there is plenty of blame on both sides of the aisle.
Should not be about politics, although there is plenty of blame on both sides of the aisle.
Posted by truthislife1
total distribution would only be $2000 apiece. Not enough to do a lot.
or this nose dive--only Republicans are to blame. Both parties agree to commit at least 50% of their caucus to the vote passing so that one party could not blame the other. The Dems got their 50% plus 10 more. The republicans got 30%. They claim 12 Repubs changed their mind after Pelosi hurt their feelings by saying this was the latest bailout in a string from bad Bush policies. But when asked for those 12 who switched--the Rep refused to let them be known (it was a lie) And after the media started saying that the Republicans were willing to throw the entire country to the wolves due to revenge voting, the Republicans realize their excuse backfired and now none will talk to the press until they find a new way to spend their vote--which obviously, killed the bailout.
I do not disagree with you. Guess the point I was trying to make, was that it is counterproductive to assign the "blame" for the crisis exclusively to either party.
From the Democrats pushing Fannie Mae (under threat of legal sanctions) to make loans to people that should have never qualified, to the Republicans "Fiddling while Rome burns" and telling us that all is well, both sides share the blame.
or this nose dive--only Republicans are to blame. Both parties agree to commit at least 50% of their caucus to the vote passing so that one party could not blame the other. The Dems got their 50% plus 10 more. The republicans got 30%. They claim 12 Repubs changed their mind after Pelosi hurt their feelings by saying this was the latest bailout in a string from bad Bush policies. But when asked for those 12 who switched--the Rep refused to let them be known (it was a lie) And after the media started saying that the Republicans were willing to throw the entire country to the wolves due to revenge voting, the Republicans realize their excuse backfired and now none will talk to the press until they find a new way to spend their vote--which obviously, killed the bailout.
I do not disagree with you. Guess the point I was trying to make, was that it is counterproductive to assign the "blame" for the crisis exclusively to either party.
From the Democrats pushing Fannie Mae (under threat of legal sanctions) to make loans to people that should have never qualified, to the Republicans "Fiddling while Rome burns" and telling us that all is well, both sides share the blame.
Posted by oriskany4 at 08:38 AM : Sep 30, 2008
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I agree....Put the fire out first, and then determined who started it....
This is the first time we tested a deregulated economy with a war that has lasted six years.
It won''t be something that can be fixed in the US Congress. They are not economic experts.
Between 1982-1988, the USSR faced a similar crisis that led to a perceived party weakness about the Communist Party.
The Republican Party faces a crisis where they have been trapped by their own pride and caught with their shorts down. The war must be ended quickly and the war-torn countries must be rebuilt under a Marshal Plan model.
Posted by sincityq at 08:41 AM : Sep 30, 2008
I agree if you add congress as a whole to "wall street". I beleive that is why McCain went to washington and why house republicans turned after being attacked by Pelosi just before the vote.
Posted by oriskany4 at 08:38 AM : Sep 30, 2008
I could not agree more. The great thing about our form of government is that we the people hold the power in our hands every two years. It just so happens the every member of the house and one third of the senate incumbants are up for re-election this year. I think that it is time to shake things up a little. Vote out all incumbants in the house and senate that are up for relection. Regardless of how you vote for President, vote against the incumbants in congress regardless of party. That is the only way that we are going to change things in Washington.
Nota Bene: As ye sow, so shally ye reap!
Posted by bjli69 at 08:52 AM : Sep 30, 2008
Ariel Sharon was right it seems when he said that ''Israel controls America''.
We have rules, regulations and Laws against all kinds of activities but criminals still break the law. And crimes have been committed here. All those low income people who could not afford a house, saw that fanny and freddy principle and interest was lower than their rent so they signed on the dotted line and walked away. I do not want to pay for their mistake, nor do I want to pay for the rich speculators who got caught with their pants down. I suspect there are more of the fomer than the latter so dummiecrats need to apeal to the most votes irrespective.
Posted by tuckerndfw at 08:53 AM : Sep 30, 2008
Can''t be long. We owe them a lot of money after all.
Who is Obama''s economic advisor? William Ayers? Reverand Wright? His finally proud to be an American wife.......perhaps Jesse Jackson?
What economic legisation has Obama proposed. Taking sides on an issue opens one to criticism but never taking sides leaves you looking fine in the eyes of liberal swooners.
That hag is the epitome of party before country.
Remember the saying.%u201D It%u2019s the economy, stupid!%u201D?
It%u2019s still true, but it now has a corollary.
%u201CIt%u2019s the foreclosures, stupid!%u201D
Stop the foreclosures and most of this mess fixes itself in short order. Repeal the ARMs that are the root of the problem. Let people stay in their homes and pay off their mortgages. It%u2019s greedy SOBs that keep the ARMs in force because they are predators of the worst kind. Granted, a lot of people should not have been given mortgages, but it is also true that very many were mislead by devious realtors and bankers.
There is no need to hand over billions of dollars to Wall Street. That is not where the problem started. The problem is a few blocks on either side of Main Street, in the neighborhoods where the foreclosure signs are popping up and blooming like dandelions.
Posted by fsw3 at 08:57 AM : Sep 30, 2008
Don''t shot the messenger. Other people on this thread are alluding to the same phenomenon.
Posted by gop_will_win at 08:58 AM : Sep 30, 2008
Who you shorting at the moment.
The Bail out did not pass for TWO Main Reasons.
1. San Fran Nan gave a little talk before the vote which was pretty negative (I sure would love to read what she said)
2. George W Bush and John McCain could not even get 1/3 of the Republicans to vote for this Bail Out.
Also. Most of the Democrats and Republicans are not willing to give President Bush a blank check at the end of his term with not oversite and or accountability on how and where this money will go.
I guess they will have to try again.
That hag is the epitome of party before country.
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Posted by easeup
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Yes blame us republicans! Imagine that! Like we had anything to do with this.
This is the first time we tested a deregulated economy with a war that has lasted six years.
It won''''t be something that can be fixed in the US Congress. They are not economic experts.
Between 1982-1988, the USSR faced a similar crisis that led to a perceived party weakness about the Communist Party.
The Republican Party faces a crisis where they have been trapped by their own pride and caught with their shorts down. The war must be ended quickly and the war-torn countries must be rebuilt under a Marshal Plan model.
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Posted by Marshall_Nee
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RIMM. I am saving my needed margin for Thursday when we can short financials again.
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