Fox News reported today that the House of Representatives voted down the bailout bill. Now the fallout hits.
Stocks spiraled downward as much as 685 points on Monday as a $700 billion bailout of Wall Street ended in defeat in the House of Representatives.
House leaders held open the vote as they tried to sway reluctant lawmakers to support the plan, which failed 205-228. Arm-twisting continued even after the vote clock expired. One member, retiring Republican Rep. Jerry Weller, did not vote.
The bill aimed to open up clogged credit lines for financial markets that had come to a near collapse. Sellers continued to shed stocks as the market teetered down more than 450 points after the vote ended.
Representatives worked throughout the weekend to make a bill palatable. Republicans had insisted on a mortgage securities insurance paid by firms who had invested in bad housing loans.
But supporters — even Republicans — said they didn't like the bailout but didn't want to play with history or risk an economic collapse.
"I'm not willing to put that bullet in the revolver and spin it. I will take the political risk," said Rep. Spencer Bachus, R-Ala., the ranking member of the House Financial Services Committee.
Dennis Prager had a guest, I think it was Dick Morris, who said the Republicans wanted to to have insurance added to the bailout bill (it would reduce or eliminate the risk to taxpayers), and they got it, but the bill gives complete discretion to Treasury Secretary Henry Paulson on how to allocate the funds. The fact that Paulson is dead-set against insurance as an option makes the addition of insurance to the bill moot.
In spite of this, both Prager and (I think) Morris, as well as Hugh Hewitt from last week, are in favor of the bill for the same reason as Rep. Bachus, above: They want to prevent economic collapse.
I want to prevent economic collapse, too. I'm just not sure of the best way to do it. And now Congress needs to go back to the drawing board, because Wall Street is starting to tank. I hope this time, though, they come up with a bill that doesn't make Paulson the Economic Emperor of America.
For some good background (unreported by the left-leaning press) on what helped cause the mortgage-banking collapse, see this post at Bryan Alexander's Right Thinking.