Bailout's Passed - Now What?

The Ultimate Effectiveness Of The Historic Financial Rescue Plan Remains Unclear

(CBS/AP)  Getting the financial rescue through Congress may have been the easy part. Getting it to work may prove the tougher task.

"The consensus of economists that I've talked to are saying we are now at the beginning of what is probably going to be a deep recession for the next six months," said CBS News correspondent Anthony Mason. "This bill had to pass to put a tourniquet on that - to hold it from getting worse - but the economy is going to go through a really rough ride."

Along with the bailout came news of the worst monthly job loss in five years, as employers shed 159,000 workers.

After two weeks of anguishing debate, Congress passed and President George W. Bush signed the enormous plan to save the financial industry and prop up the economy in hopes of avoiding an unthinkable free fall with Election Day just a month away.

Now the pressure's on Treasury Secretary Henry Paulson, who has just 45 days to figure out how to spend it, reports CBS News correspondent Kimberly Dozier. But Paulson's already admitted he doesn't have enough people to do it, so he plans to outsource the job to experts on Wall Street - essentially the folks who created the problem, reports Dozier.

Treasury Secretary Henry Paulson, at a meeting last month, had shocked congressional leaders into action by warning of pending economic collapse without immediate federal intervention. After the climatic House vote on Friday, he said aides already were working out details and lining up advisers from outside the government so the money could start flowing. The goal is to unfreeze credit markets.

The immediate response to the 263-171 vote was not promising. Wall Street, which plunged a record 778 points after the House initially rejected the bill last Monday, fell 157 points. More economic bad news - a jump in job losses - outweighed the good news from Capitol Hill.

"Congress took a big step in the direction of at least giving us the tools necessary to bring some stability into the marketplace," Bush said Saturday while visiting Midland, Texas, his boyhood hometown.

Earlier, in his weekly radio address, Bush spoke cautiously about the economy's future. "My administration will move as quickly as possible, but the benefits of this package will not all be felt immediately. The federal government will undertake this rescue plan at a careful and deliberate pace to ensure that your tax dollars are spent wisely," he said.

Bush acknowledged that people are worried about their personal finances. "I'm confident by getting our markets moving, we will help unleash the key to our continued economic success: the entrepreneurial spirit of the American people," he said.

House Republican leader John Boehner of Ohio said lawmakers knew that if they failed to act, the crisis probably would worsen and "put us in a slump the likes of which most of us have never seen." The bailout, said House Speaker Nancy Pelosi, a California Democrat, is intended to help address "the real pain felt by Mr. and Mrs. Jones on Main Street."

The Bush administration gained broad authority to buy up toxic mortgage-related investments and other distressed assets from shaky financial institutions. The hope is it will restore confidence in markets and thaw a near-freeze in credit availability that has begun to affect the ability of banks to lend, businesses to obtain money for payrolls and investments, and individuals to gain credit to buy a home or a car.

In an attempt to aid smaller banks with serious liquidity problems, the measure raises the ceiling on federally insured deposits from $100,000 to $250,000. It increases federal oversight over Wall Street transactions and assures that chief executives whose companies benefit from the bailout do not leave with huge golden parachute payoffs.

Last Monday, despite pleas from Bush and his financial advisers and the support of congressional leaders, the House voted 228-205 to reject the rescue plan. Stock markets around the world plunged, then recovered somewhat as economists warned that the U.S. was facing its gravest economic threat since the Great Depression.

But the 95 Democrats and 133 Republicans who voted against the bill were responding to a deluge of calls and messages from constituents demanding defeat of the plan. Many saw it as a $700 billion giveaway to Wall Street when average people were getting no help.

Shortly before recessing for the election, senators stepped in and approved legislation Wednesday that linked the rescue to the extension of popular tax breaks for research and development, renewable energy and victims of natural disasters. The $110 billion in additions included benefits parity for people with mental health problems. The Senate also added the boost in the ceiling for bank deposits.

Those extras were enough to sway some House members who voted "no" the first time around. Others were swamped by calls from business and political leaders warning of the possible consequences of inaction.

California Gov. Arnold Schwarzenegger sent out a letter that said without a clear resolution to the crisis, his state and others "may be unable to obtain the necessary level of financing to maintain government operations and may be forced to turn to the federal Treasury for short-term financing."

The treasurer of Massachusetts, prompted by the state's inability to borrow from the short-term debt markets, has asked the federal government about lending Massachusetts money under the same favorable terms it has given banks and firms during the financial crisis.

Democrat presidential nominee Barack Obama spoke to many in the Congressional Black Caucus and helped persuade 13 to switch their votes. Nine freshmen Democrats also switched to "yes" votes after a conference call with Obama in which he promised an economic stimulus bill would be a top priority if he is elected.

Republican John McCain also lobbied for the measure, according to aides who declined to release a list of lawmakers he called.

All told, Democrats had 33 converts to the plan while 25 Republicans switched their vote, reports CBS News correspondent Bob Orr. In the end, 91 Republicans joined 172 Democrats to support the measure while 108 Republicans and 63 Democrats voted 'no."'

The global nature of the crisis was underscored by a hastily arranged European summit, which kicked off in Paris Saturday. British Prime Minister Gordon Brown called on his counterparts to do "whatever is necessary" to protect strong banks and restore stability.

But French President Nikolas Sarkozy announced that the EU will continue taking a country by country approach, though nations would try to coordinate efforts across borders so that actions in one country would not adversely effect another, reports CBS News correspondent Mark Phillips.

[simplemind2]

All the fools that lost their money owning the Wall Street stocks - have no fear.
Robin Hood McCain and Ms. Governor Palin are coming to rescue you - WINK WINK!
Your financial problem will be solved right after coming November''s election - provided you cast your sacred vote to both of them and also only if they win - WINK WINK!
You might receive some fringe benefits - provided you cast your sacred vote to both of them and also only if they win - WINK WINK!
WINK WINK! pause - WINK WINK! pause - WINK WINK!

[roghil]

Well, I just want to know when I get bailed out? I''m not in debt, I guess I mismanaged my investments by not bailing out of them sooner. Not as bad as causing the whole problem by stealing profits in the form of bonuses for failing to do my job. I just lost a lot of money on paper. Where''s my share of the bailout?

[simplemind2]

Now God has spoken -
Behold, you fool.
You kept on praying the last 8 years and asking me to show you a "SIGN".
Haven''t you witnessed enough "SIGNs" yet?!
If you keep on playing dumb - you all will be SOL!

[payasyougo]

Pelosi should understand.
This "bailout" is like plastic surgery.
Even if the amount of money spent is high, there is no guarantee it will be worth it. And the "fix" is only on the surface. Underneath, the problems are still deep and ugly. What little does work will wear off relatively quickly.

[simplemind2]

"Posted by minnick8 at 04:26 PM : Oct 06, 2008"

Is that you Sarah?
I can see you WINK again!
I don''t think Jesus Christ likes to see you WINK at strangers specially you are one of the die-hard Bushit supporters.
Coming November just say NO to Bushit/McCain/Palin.

[minnick8-2009]

We listed all the reasons Republicans will lose this term, be sure to add any other reasons we missed. www.theseriouspolice.com

Posted by Kellyanne5

Don''t count your chickens before they hatch. It isn''t over until it is over. I prefer to wait for the election tally.

[minnick8-2009]

I''m so disgusted in levels of greed all across the land. The politicians have been greedy, and the CEO''s have been greedy, but so have the people. Just because houses costing 3 X as much as people could afford were dangled in front of them, that doesn''t mean they had to take the bait. I didn''t lose my 300,000 dollar house. I didn''t buy one. But now, I''m ticked off; I could have, and ya''ll could be bailing me out too. Golly, I was sure dumb.

[minnick8-2009]

there is NO HOPE.

Posted by oledakota

There really is hope, but it isn''t Obama, and it may not be McCain. You should try Hope in Jesus Christ.

[minnick8-2009]

Posted by Simplemind2

Simplemind, you have picked a good name for yourself.

Martha

[xmanborg]

Bailout''s Passed - Now What

Well all George W Bushies Cronie friends line up on Wall Street and get a Fat Frickin Check and dont have to pay it back because as of Friday thats when the Accounting ERRORS Started. DiCKKKK Cheney has already gotten 500 Million dollars for shopping, cars, vacaions and a few new houses.

[gandaulf2000]

now what?, Next, the resturants will start laying off due to lack of bussiness. Over inflated food pricing and high gas will send the resturants tumbling.

[simplemind2]

Now die-hard Republicans are encouraging Ms. Governor Palin to do a spread in the P_____y magazine - instead of just "WINKING".
Stay tuned...

[kellyanne5]

We listed all the reasons Republicans will lose this term, be sure to add any other reasons we missed. www.theseriouspolice.com

[jt_lancer]

oledakota - ''Give this Obama dude, at least a ''chance'' to save this country.''

A puzzling comment, to say the least, considering that Obama and the Democratic leadership in Congress championed this taxpayer funded bailout of investment banks just as much as the Bush administration and Repubs.

[gocubs58]

Now what?? The US tax payers lose again.

Wall St. - 850 Billon
Taxpayers - 0

[aztecdakota]

Well, told you about the first Bush, to no avail, told you about the 2nd Bush, to no avail. You let that 850 BILLION DOLLAR BILL GO THROUGH, my goodness, and the banks Bush is giving the money too are shutting down next year. That would have meant about 3 thousand dollars for every man, woman, and child, in America. We could have bailed our own selves out of debt! I found the WEAPONS OF MASS DESTRUCTION THAT THE BUSH REGIME COULD NOT FIND. It is an inside job! Bush , Cheney, and all their croneys. AND they are going to waste you MORE. As soon and you vote for McCain and Palin, you are putting this brutal Bush, Cheney regime right back into power. For goodness sake America, wise up, rise up! We are being destroyed from within. Give this Obama dude, at least a "chance" to save this country. On the road we are traveling now, there is NO HOPE.

[raskal_2]

They are going to outsource the work of this bailout to the very ones who created the problem. Any lobby efforts come to fruition or what? the good ol'' boys network is alive and well.

[iphyt4u]

it''s not going to help, the economy is going to get a lot worse before it gets better. by march of 2009 our government won''t even be able to afford bread lines. now that the bush administration changed the bancruptcy laws, buys out banks and mortgage companies, taps phone lines, reads your email, the republicans have done it, they turned us into communist.

[jesusface]

Bipartisan bailout
Sixty five percent (65%) of the representatives who voted yes to the bailout were Democrats and sixty three percent (63%) who voted no were Republicans.
What a weird outcome especially that President Bush, who is the instigator of the bailout, is a Republican.
I hope the democrats have a %u201CPlan B%u201D in case the fragile ship starts to sink in stormy waters%u2026

[ubrew12]

What I''ve learned:

The ''bailout'' was needed to get us through a time of perverse LACK of enthusiasm about the economy. We all know the economy will recover, we just don''t know when. So, hang tight, and don''t blame the gov''t for trying to cushion the hard edges of extreme economic panic/enthusiasm.

Just blame the Republicans for doubling our national debt, making it much harder for the gov''t to do so...