Taking Stock Of The Wall Street Bailout

With word of agreement on a Wall Street rescue package, Rita Braver examines what it took to get to this point on Capitol Hill, while from New York Anthony Mason reports on what's at stake for Wall Street - and Main Street.

House Speaker Nancy Pelosi says the hard work has been done "to stabilize the markets, [and] most importantly to protect the U.S. taxpayers."

Democrats got salary limits for executives of companies that get bailed out, and Congressman Barney Frank said there were many reasons to be pleased:

"The good news is that it is entirely likely that within a few days - and I hope no one will be offended - I won't have to speak to almost any of the people who are now here. All of them! All of them!"

"How thankful we are for that, Barney!" laughed Senator Chris Dodd.

It was Republican House leaders like Roy Blunt who slowed the deal down over the last few days, and he was still sounding a cautious note, saying he wants to see the agreement in writing.

"These are difficult issues and everybody showed lots of patience," Frank said.

And if you've wondering why the president had so much trouble getting his own party on board, well, he may be asking himself the same thing:

"Do you think the administration just underestimated what their own Republican base would say about this idea?" Braver asked Jim Vandehei, executive editor of Politico.com.

"Clearly, I mean, you gotta remember the mindset of President Bush for the longest time he could just snap his fingers - they did what ever he wanted."

But Vandehie says those days are long gone.

"They think it's good politically to do the opposite of what George Bush does," he said. "He is unpopular. His popularity rate is below freezing. That's not good in politics."

"I think this is the most significant financial crisis of the post-war period of the United States," Fed chairman Ben Bernanke told Congress this week, "and has in fact a global reach."

So along with the $700 billion of federal money that administration officials say is necessary to shore up the nation's financial system, sources say that conservatives got a version of the government-backed insurance program they wanted financial companies to buy into, in order to cover some of the bad debts.

Political analyst Stuart Rothenberg told Braver, "They believe they're trying to take back their party from the people who are working with the Democrats, who bought into the big government argument, and so there is this division within the party."

Rothenberg says that both Republicans and Democrats are worried about how voters will view any deal:

"They're probably going to argue that they were able to nibble around the edges to improve the package. They'll take credit for it, they'll say, 'Oh, we protected the taxpayer and without us it would have been worse.'"

Though John McCain made a brief attempt to get involved in the process, and both presidential candidates went to the White House this past week, neither wanted to talk about details at Friday night's debate - or even acknowledge the obvious.

Is the bailout going to limit what the next president will be able to do, Braver asked.

"Unquestionably," Rothenberg said. "The spending that's already in the pipeline for Iraq, maybe additional spending for Afghanistan, combined with this huge domestic package, I think it will be very difficult for the next administration coming in to propose big spending programs."

Now that there is a deal, the public will have to be persuaded that it was the only way to head off an economic melt down.

And considering the angry calls and e-mails pouring into Capitol Hill (at one Congressman's office, running nine to one against), that might not be so easy.

"There is a big sales job to go out there and pitch this," Vandehie said. "If they end up buying these assets that are not worth anything, you are essentially asking every single person in this country to kick in a couple of thousand dollars. Well, if I wasn't irresponsible with my mortgage, if did the right thing, well, then you're gonna be pretty darn irritated if you're the one who's asked to pick up the tab."

"We need to see confidence and transparency returned to our financial markets. It's as simple as that."

But by Friday, bad mortgage loans had brought down another blue chip bank. Washington Mutual, the nation's largest savings & loan, was seized by the government and sold to JPMorgan Chase, at a bargain basement price.

Ashton Tyler said of the week's events, "We'll all remember this. Twenty, 30 years from now our kids will be talking about what happened just like we do with our grandparents now."

The FDIC assured depositors that they are protected. But WaMu's stockholders lost everything.

Alfred Trope, a Washington Mutual customer, told CBS News, "If these banks keep failing, we are going to be in a depression."

The "D" word.

Wall Street utters it uneasily. But even Fed chairman Ben Bernanke, a student of the Great Depression, called the situation "grave," as the crisis in the credit markets only deepened.

Ira Jersey of Credit Suisse, one of the world's biggest banks, says the situation is not getting any better now, and told Anthony Mason that the credit markets have virtually frozen.

"'When you say the credit markets are 'frozen up,' what does that really mean?" Mason asked.

"It basically means that no one can really get any type of credit, any type of loan," Jersey said.

Because banks have lost trust even in each other.

"The worry right now is that banks not being willing to lend to each other," Jersey said. "Not being willing to lend to anyone creates the risk of just a market-wide failure."

How serious is it? Think of credit as the oil in the engine of the economy. It's what allows entrepreneurs to start a company and hire workers. It's what allows most of us to buy a house or get a car. And just like a car, take the oil out of the economy's engine and the engine blows up.

"Well, you know there's this little historical event called the Great Depression, and we don't know that left unchecked this would produce another Great Depression," Princeton University economist and New York Times columnist Paul Krugman told Mason. "But there's a family resemblance between what's going on now and the banking crisis that was the real cause of the Great Depression."

Krugman warns that even if Congress comes up with a rescue plan, our problems will be far from over.

"I think we can probably expect to see the credit markets return to their previous, mildly stressed condition," he said. "It's going to be unlikely that you'll see things return to normal.

"It's basically still the patient is running a fever of 101° - but not a fever of 104°.

The deal is a big step towards restoring confidence in the banks and getting credit moving again. In New York, Washington and around the world, everyone is hoping it will take the U.S. economy off the critical list.