House Kills Bailout, Dow Drops 700 Points

Drudge reported that the Dow plunged 500 points. Something happened. I’ll post more as it comes in.

Update:

Looks like investors are fearing the bailout will not pass. Dow down now 700 points.

Update II:

I’ve heard several unconfirmed reportst that the bailout has not passed. One that it failed in the Senate and the other that if failed in the House. Take this with a shovel of salt.

Update III:

The bailout vote has stalled. This seems to be similar to an earlier story, but with a new headline that sounds more ominous. Sheesh, can’t these guys get the information out there?

Update: IV

They’ve changed the title of the story back. Christ.

Update V:

Okay, looks like the vote on the bailout has indeed failed.

The US House of Representatives has voted down the $700 billion emergency rescue package for beleaguered financial companies.

217 votes were needed for the bailout to be passed. Only 206 votes were cast in favour, by 141 Democrats and 66 Republicans.

More here. Looks like the vote is being held open and there are attempts to persuade some of those voting against to vote in favor.

Note: I’ve changed the title of this post to more accurately reflect its content.

UPDATE (Dave Schuler): With the same unerring instinct for self-destruction that Illinois Republicans have been demonstrating in recent years, the House Republicans have now taken ownership of any problems in the broader economy that take place as a consequence of their refusal to vote in favor of a rescue plan for the financial sector. I have no comment on the pragmatics of the plan. I don’t think anybody really knows whether it will work or not but the market was rather obviously expecting them to pass a plan and they’ve refused to do so.

Look, they may well be right. Leaving well alone might be the best course of action. But I seriously doubt that anybody would arrive at that conclusion by the first Tuesday in November and after that it’ll be too late.

UPDATE (James Joyner): Dave’s likely right on the politics of this.  While I’m not at all sure that passing the bill was the right long term policy, it was likely 1) the best thing for the short term stability of the markets and 2) bipartisan and thus not politically costly.

This photo, currently topping the front page of YahooNews, somehow seems apt:

House Republican Leader, Rep. John Boehner, R-Ohio, and House Republican Whip, Rep. Roy Blunt, R-Mo., speak to reporters after a lengthy House Republican conference meeting regarding legislation on the financial crisis Sunday, Sept. 28, 2008 on Capitol Hill in Washington. (AP Photo/Lauren Victoria Burke)

House Republican Leader, Rep. John Boehner, R-Ohio, and House Republican Whip, Rep. Roy Blunt, R-Mo., speak to reporters after a lengthy House Republican conference meeting regarding legislation on the financial crisis Sunday, Sept. 28, 2008 on Capitol Hill in Washington. (AP Photo/Lauren Victoria Burke)

Update (Steve Verdon):

Well, I don’t think this failure of the bailout is going to be the end of the world. In watching the Dow it looks like things are slowly making their way to the 10,500 mark. If it was as necessary as the law makers made it out I’d have expected free fall in the stock market and we aren’t getting that….yet.

As for what went wrong the early word is that Nancy Pelosi’s partisan speech on the floor set a sour tone. Still, I’m a little doubtful that the whole thing was killed because the Republicans were annoyed at Pelosi’s grandstanding and propaganda.

Update (Alex Knapp):

I’m not as surprised as Steve that stocks aren’t in a total free-fall. There’s a couple of reasons for that. (1) The Fed’s boosting the supply of cash for loans to banks, and (2) Citgroup’s smooth takeover of Wachovia, which is one of the banks that was considered on the brink of failure. I think that these two factors are cushioning the market right now. Additionally, there’s no question that negotiations over the bailout are going to restart. If a bailout proposal fails a second time (not just a revote, but a different bill), then I think that the markets are going to have a real problem.

UPDATE (Dave Schuler)

Nancy Pelosi had already been reported as demanding that Republicans produce more than 100 votes in favor of the bailout before imposing discipline on the Democratic caucus. The Republican refusal to support the bill left Democrats in competitive races and ideologues the freedom to vote their political preference. At this point I’d be very surprised if a bill more palatable to rebelling Republicans will be brought up. The Democrats are far more likely to pursue defectors from within their own ranks. Brad DeLong’s advice exemplifies this course:

Bring Congress back into session after the election and go for the Swedish plan: nationalize the insolvent large financial institutions: dare Bush to veto that after the election

FILED UNDER: Economics and Business, Government, , ,
Steve Verdon
About Steve Verdon
Steve has a B.A. in Economics from the University of California, Los Angeles and attended graduate school at The George Washington University, leaving school shortly before staring work on his dissertation when his first child was born. He works in the energy industry and prior to that worked at the Bureau of Labor Statistics in the Division of Price Index and Number Research. He joined the staff at OTB in November 2004.

Comments

  1. Moonage says:

    The Republicans not voting for it didn’t surprise me. 90 Democrats opposing it does.

    What I’m hearing is Nancy Pelosi “rallied” the troops by blaming it all on “Bush’s failed economic policies”.

    Now, I’m hearing they’re expecting 9 Republicans to change their vote for a re-consideration.

    Question: Why would Nancy Pelosi suddenly expect nine members of the minority opposition party support her? Wouldn’t be easier for the Majority Leader to get nine of her own people to vote for it?

    She has got to be the worst. majority leader. ever.

  2. Anderson says:

    The news that Anne Hathaway enjoys anal sex is probably even more inconsequential to my daily life than the bailout bill, but of greater abstract interest.

  3. Anderson says:

    Why would Nancy Pelosi suddenly expect nine members of the minority opposition party support her?

    Because a Republican president is asking for this bill to pass? Would that be one reason?

  4. Triumph says:

    What’s going on? I thought McCain re-started his campaign last week because he brokered a deal?

    He needs to re-suspend campaigning immediately to take care of this mess. Unfortunately, it is unlikely that an alternative bill will be hatched until next week, so we probably ought to cancel the VP debate as well.

    McCain and Palin will clearly do what is best for the country and suspend campaigning until they broker a deal.

  5. Moonage says:

    “Because a Republican president is asking for this bill to pass? Would that be one reason?”

    OK, I’ll put it this way. According to one report I’ve heard, Nancy poisoned the Republican well by giving a highly partisan rally speech. Blaming it all on Bush and the Republicans. Bush had already done his arm-twisting. So, now, Nancy is supposed to go to those Republicans she just insulted, again, and ask for their support? I would assume if Nancy really wanted this thing passed, she would not have attacked the minority party, and, she would have better luck asking members of her own party.

    My gut feeling, contrary to her public statements, she’d prefer the economy take a nose dive to assure an Obama victory.

    “What’s going on? I thought McCain re-started his campaign last week because he brokered a deal?”

    It passed the Senate. That’s where McCain hangs out. We’re talking about Congress now.

  6. Anderson says:

    According to one report I’ve heard, Nancy poisoned the Republican well by giving a highly partisan rally speech.

    So, let me get this straight:

    The official GOP talking point is that Repubs vote, not based on what President Bush and Secretary Paulson recommend; not based on what’s good for the economy;

    … but rather, based on what Nancy Pelosi says?

    Look for a new talking point, is my sincere advice.

    It passed the Senate.

    Really? When?

  7. […] HOME|FRIENDLIES|OPPOSITION|SECURITY|TRENDS|MEDIA|CONTESTS|LINKS « Previous | Home | Michael Moore Gets […]

  8. Steve Verdon says:

    OK, I’ll put it this way. According to one report I’ve heard, Nancy poisoned the Republican well by giving a highly partisan rally speech. Blaming it all on Bush and the Republicans. Bush had already done his arm-twisting. So, now, Nancy is supposed to go to those Republicans she just insulted, again, and ask for their support? I would assume if Nancy really wanted this thing passed, she would not have attacked the minority party, and, she would have better luck asking members of her own party.

    There is that. And this is supposed to be a crisis when partisan differences are put aside, but instead she took a moment to engage in “Blame the Otherside” while eschewing her own parties role in the process. Stupid move if she really wanted the bill to pass.

    My gut feeling, contrary to her public statements, she’d prefer the economy take a nose dive to assure an Obama victory.

    My cynical side agrees with you.

  9. Anderson says:

    Eve Fairbanks at TNR:

    give me a break! No matter what you thought of the details of the bill, is that not the most immature thing you’ve ever heard? To vote against the biggest bill of the year — to let, as President Bush put it, the sucker go down — because the Speaker insulted your feelings?

    Not your father’s GOP.

  10. Moonage says:

    “The official GOP talking point is that Repubs vote, not based on what President Bush and Secretary Paulson recommend; not based on what’s good for the economy;”

    You have gotten it completely backwards.

    The GOP voted based on what they thought was good for the country, it would be up to Pelosi to convince them to vote against their initial instinct. How’s she going to accomplish that by insulting them?

    Huh?

    Now, the Democrats who went against her wishes are in a different situation since she hasn’t insulted them.

    Now, how would you feel if I called you an idiot and then asked to borrow your credit card?

    If I got the President of the United States to tell you I really needed that credit card, would you?

    Huh?

  11. Tad says:

    Not your father’s GOP.

    No, it’s certainly not. I’m not shocked that we’ve yet again reached the ‘they hurt my feelings’ defense.

    On a more serious note the Republicans just bought the blame for whatever happens next. The democrats have a finite moment in time that they can point to and say ‘we tried, but they stopped us from fixing it.’ And no it doesn’t matter weather it’s true this would have fixed it or not.

  12. anjin-san says:

    According to one report I’ve heard, Nancy poisoned the Republican well by giving a highly partisan rally speech.

    So Republicans in the house are willing to flush the economy down the toilet because Pelosi was meanie?

  13. Steve Verdon says:

    I think the “bought the blame” thing is not going to work the way everyone is saying it will.

    1. It doesn’t appear to have had as big an impact as the pre-vote rhetoric indicated.

    2. There were plenty of Democrats to vote for this thing if it really really is that necessary.

    Again blame goes around on this one.

  14. Triumph says:

    Well, I don’t think this failure of the bailout is going to be the end of the world. In watching the Dow it looks like things are slowly making their way to the 10,500 mark. If it was as necessary as the law makers made it out I’d have expected free fall in the stock market and we aren’t getting that….yet.

    Yeah, i was hoping it would fall more, too. But this move still is good news for me.

    The first thing I did this morning was have my broker short my index fund (tied to the S&P 500) since I had a feeling the markets would react poorly.

    When I’m shorting, I’ll take a 7% fall anyday!

    This is the best day of my life!

  15. FormerHostage says:

    If this was such a good deal for the country and the “patriotic” thing to do (according to Nancy) then why did some Democrats vote against it? All Nancy had to do was to get all her people to vote the party line and it would’ve been all over.

    Were Republicans thin-skinned about her remarks? Possibly…or, maybe they though they saw her laying the groundwork to blame them when this whole thing went South. Look at how right now it’s the Republican’s fault that we’re in this mess even though it was Republicans who were expressing concern years ago and Democrats who were defending Fannie and Freddy.

  16. […] my update to the post below for my thoughts on the likelihood of a plan more palatable to the Republicans being brought up […]

  17. Michael says:

    I think the “bought the blame” thing is not going to work the way everyone is saying it will.

    1. It doesn’t appear to have had as big an impact as the pre-vote rhetoric indicated.

    2. There were plenty of Democrats to vote for this thing if it really really is that necessary.

    Again blame goes around on this one.

    And if reality worked that way, we’d all be better off. But the meme is already been cast, and is hardening quickly, the House Republicans will own the outcome of this.

    Still, if this drop is the worst we get for not giving away $700 billion, I think I can live with that. The bar has also been lowered now, a much smaller proposal, offered up now, might will give more confidence that it would have a week ago.

  18. Tad says:

    Again blame goes around on this one.

    I agree that it’s true that the blame does in fact go all around on this one. But it doesn’t matter, there is no way the true statements ‘Bailout fails,’ ‘Republicans voted overwhelming against the bill,’ and ‘Republicans kill bailout bill’ aren’t going to be the news of the day. How many steps is that from ‘Republicans Kill bailout…X happens…republicans at fault.’ No one’s going to seriously buy the ‘it’s Nancy’s fault she hurt our feelings.’

    How many steps to putting this directly at John McCain?

  19. just me says:

    My gut feeling, contrary to her public statements, she’d prefer the economy take a nose dive to assure an Obama victory.

    I agree.

    Not to mention a lot of members of her own party voted against it-if she wanted this bill, then she didn’t need the GOP.

    I do think the “She called us names” sounds a bit whiney. If they voted against it, that’s fine with me, but at least be honest and say why.

    But the more I see partisanship over this issue the more I wonder if it is the “emergency” we are being told it is.

  20. […] put most of my comments on the rejection of the plan over at Outside the Beltway. I have no comment on the pragmatics of […]

  21. Triumph says:

    Not to mention a lot of members of her own party voted against it-if she wanted this bill, then she didn’t need the GOP.

    The real losers are Blunt & Boehner. They could only get 30% of their caucus to support their position.

    Pelosi did pretty well to get 60% of her caucus.

  22. anjin-san says:

    Clearly, in this crisis, bold leadership is needed.

    Palin had it just right, the entire world is waiting to see what John McCain will do.

    I think he should take the bold step and suspend his campaign!

    Then he can return to the capital, take charge, and lead us out of the wilderness.

    Only a great man, a Cesar, an Alexander, can save us now. Luckily, we have one such man at hand.

    Oh. Wait. It’s been done already 🙂

  23. rodney dill says:

    Peloser certainly showed, with her pre-vote rant against Bush and the Republicans, the bi-partisan leadership and lack of finger pointing we can expect of a President Obumble.