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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Play CBS Video Video 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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Video 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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Video 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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Interactive Eye On The Economy In-depth features on U.S. markets, taxes, employment and the Federal Reserve.
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Timeline Credit Crunch Feeling the squeeze? Here's a look at actions and statements from key players in Washington.
"There is no extra capital," Jay Cullimore, owner of Tropical Lighting, told CBS News. Cullimore needs that capital to buy holiday inventory for his Florida-based company.
"We are a little late on buying. And it's been a little tough to figure how much we can buy. So we're kind of playing it by ear because we really can't get the cash we're looking for."
Traders on the floor of the New York Stock Exchange, still stunned from Monday's 778-point rout in the Dow Jones industrial average, warned that the government needs to approve a plan that will sweep away the fears that hobbled the credit markets. While U.S. political leaders have vowed to revisit the issue, the House isn't slated to meet again until Thursday.
"If it doesn't pass, then look out below," said Jason Weisberg, an NYSE trader for Seaport Securities. "It could get ugly."
Though the blue-chip index rose nearly 500 points by late afternoon, the main worry for traders is that a lack of a plan will make it nearly impossible for some companies to fund basic operations like making payroll. Participants in the credit market buy and sell debt that companies use to finance operations.
The benchmark London Interbank Offered Rate, or LIBOR, that banks charge to lend to one another, rose sharply Tuesday, making it more expensive and difficult for consumers and businesses to borrow money. In addition, credit card debt and more than half of adjustable-rate mortgages are tied to LIBOR, so an increase isn't welcome for many consumers.
LIBOR for 3-month dollar loans rose to 4.05 percent from 3.88 percent on Monday. LIBOR for 3-month euro loans, meanwhile, rose to 5.27 percent, from 5.22 percent Monday.
Critics of the bailout package believe that it was too costly and wouldn't have done enough to jump-start lending. To maintain pressure ahead of Thursday's likely vote, President Bush said in a statement from the White House early Tuesday that the damage to the economy will be "painful and lasting" unless Congress passes the bailout measure.
On Wall Street, many traders likely will proceed cautiously while they gauge prospects for resurrecting the bailout effort, which was backed by leaders of both parties.
"I'm not getting the sense that investors are going to be jumping in with both feet until there is some kind of resolution on the plan," said James Maguire, an NYSE floor trader with Christopher J. Forbes. "If there's a no vote, we're going to see a lower overall drift in stocks. It will be a slow bleed."
Traders also will likely focus on how the bloodshed will look on paper. Tuesday marks the final session of the third quarter - and what is typically the worst month for the stock market - so some portfolio managers might try to do what they can to dress up their performance. Others might simply wish to dump holdings in an unpopular corners of the market like the financial sector.
At the close, the Dow rose 485.21, or 4.68 percent, to 10,850.66 after falling nearly 7 percent on Monday to its lowest close in nearly three years. It was the largest point drop and 17th largest percentage drop in the blue chip index. The percentage decline was far less severe than the 20-plus-percent drops seen in the stock market crash of October 1987 and before the Great Depression.
Broader stock indicators also bounced higher. The Standard & Poor's 500 index recovered 58.34, or 5.27 percent, to 1,164.73, and the Nasdaq composite index rose 98.60, or 4.97 percent, to 2,082.33.
The S&P fell 8.79 percent Monday, while the Nasdaq lost 9.14 percent.
The yield on the 3-month Treasury bill rose Tuesday to 0.89 percent from 0.14 percent late Monday. The yield fell Monday as investors clamored for the safety of government debt. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.83 percent from 3.58 percent late Monday. The dollar rose against other major currencies and gold prices advanced.
While investors focused on what might come from Washington this week, Wall Street was cheered by several economic readings.
A private research group reported that consumer confidence rose unexpectedly in September. The Conference Board said Tuesday its Consumer Confidence Index rose to 59.8 from a revised 58.5 in August; Wall Street had expected a reading of 55.5, according to Thomson/IFR. The reading, which doesn't reflect attitudes following Monday's steep stock market sell-off, remains near a 16-year low.
The Chicago Purchasing Managers' index, which measures business conditions across Illinois, Michigan and Indiana, came in at 56.7 compared with 57.9 in August - a second straight month of a strong reading.
Light, sweet crude rose $4.27 to settle at $100.64 on the New York Mercantile Exchange. Oil fell more than $10 a barrel Monday as investors worried that a weaker economy would curtail demand.
Advancing issues outnumbered decliners by about 2 to 1 on the New York Stock Exchange, where volume came to a light 1.02 billion shares.
The Russell 2000 index of smaller companies rose 22.86, or 3.32 percent, to 679.58.
Overseas, Japan's Nikkei stock average fell 4.12 percent. But Hong Kong's Hang Seng index rose 0.76. Britain's FTSE 100 rose 1.74 percent, Germany's DAX index added 0.41 percent, and France's CAC-40 rose 1.99 percent.
© 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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Michelle Obama tells how her role as the First Lady has changed her perspective.
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See all 1152 CommentsLa. Senators: Vitter (Rep) Landrieu(Dem) and Cazayoux (Dem) are making folks here in Louisiana feel confident. Because all three of them have voted no to the Bail Out, twice already. And we have a great Governor (Bobby Jindall) who wisely chose to have nothing to say or do with the bail out. Maybe 4 years from now, if we still have any resemblance of a democracy, Bobby Jindall or someone like Ron Paul will run for president and the media as well as the "political experts" will SHUT UP and let America have some breathing room to vote freely for a change. And by the way. I have been emailing my Congress people not just to say no to the bail out but also to thank them for voting no. We should all contact our "Representatives" and thank them when they actually listen to us. They didn''t vote the way they were asked to. They could have just ignored us like Obama and McCain did.
Posted by ibsteve2u at 10:23 AM : Oct 01, 2008
You''re a complete and utter moron, and you''re grasping at straws.
If Fannie Mae, Freddie Mac, and the rest of the home lending industry had not been deregulated in the name of "affordable housing" (a.k.a. let''s lend money to individuals who can''t possibly pay it back),
NONE OF THIS MESS WOULD HAVE HAPPENED.
MAKE THEM PAY for letting the fat cats play.
Posted by txgrouch2006 at 10:03 AM : Oct 01, 2008
You sort of left out the part about how the Administration in fact tried to get Congress to turn Fannie Mae and Freddie Mac over to then-Treasury Secretary Snow, thus putting what - $1.5 trillion? - where this Administration could manipulate it.
People know enough about this Administration NOW that giving Treasury Secretary Paulson HALF of that amount - $700 billion - was rejected almost UNIVERSALLY by Reps and Dems alike.
The fact is the Democrats were smart to block a gang of theives, liars, and con artists from getting their hands on that amount of financial power.
Republican deregulation is the real answer to:
"Who let the dawgs out?"
But of course I do not expect the "Party of Responsibility" - the Republicans - to take responsibility for their actions; they have wisely never claimed to be the "Party of Truth".
Posted by banders6 at 08:19 AM : Oct 01, 2008
I just went to www.congress.org and send a Web Form to all three of my representatives to say NO BAILOUT.
Barney Frank is one who opposed closer regulation of Fannie Mae and Freddie Mac. Five years ago in a New York Times interview, he said more regulation would hurt the "affordable housing" agenda.
MAKE THEM PAY for letting the fat cats play.
Cut Baracks financial backers off at the knees, vote no bail out.
will make it tough for Pelosi and Reid
to vote against the bailout."
Right!,,,We got Pelosi and Reid as leaders,
who, before they lead, check to make sure
that they are following how their followers
wish to be lead.
Makes sense to me.
NO BAILOUT!
Or call their offices and clog the lines.
If we say NO and they ay YES the we say NO at re-election
1) Keep the people afraid
2) Keep the people de-moralized
3) Keep the people in debt and broke
These things and events will help to control the "common Man".
That''s what they are doing, right now !...Be sure to tell your elected official in D.C. to take this Rip Off / UNCONSTITUTIONAL BAIL OUT scam and shove it !
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