Congress rejects US bailout plan, triggering Wall Street slide
In a shock move, US legislators have narrowly rejected the $US700 billion financial markets bailout, triggering one of the biggest falls ever on Wall Street.
As Wall Street markets ground to a halt this morning (NZ time) the Dow Jones Industrial index was down 777.68, or 7%.
Just before 7am (NZ time), the count was 228 against the bailout plan and 205 in favour, not enough to allow the bill to survive.
Commentators said it was likely the legislation will be withdrawn and reworked until a majority can be guaranteed.
"We've got to find a true middle ground," Republican Minority leader John Boehner said after the vote. "We need everyone to calm down and relax and get back to work."
A majority of those against were Republicans, who say the plan is unfair to taxpayers footing the bill and is too great an intervention in the private sector.
As the bailout plan faced failure, the main Wall Street index dropped up to 700 points, or more than 5%, a bigger fall than after the Sept 11, 2001, terrorist attacks. When the vote result was finalised, the index was down more than 500 points.
The vote comes after lawmakers and the Bush administration finalised legislation after a weekend of high-stakes negotiations over the controversial measure, which is designed to get battered US credit markets working normally again.
The plan had the backing of President George W Bush and Federal Reserve chairman Ben Bernanke, as well as Barack Obama and John McCain, the Democratic and Republican presidential candidates.
A wide range of business interests also called for the legislation to be passed.
But it proved a bridge too far for conservative Republicans, who warned the bailout was too far-reaching and would fundamentally change the role of government in the economy.
President Bush, speaking earlier at the White House, called the proposed measure "an extraordinary agreement to deal with an extraordinary problem."
He added: "With this strong and decisive legislation, we will help restart the flow of credit so American families can meet their daily needs and American businesses can make purchases, ship goods and meet their payrolls."
See also: Oil plummets
European banks bailed out
Kiwi dollar hit
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Comments and questions27
Pelosi and democrats are the root of all evil and to blame this on bush is stupid. Democrats do nothing but flip flop!!!!!!
i don't know about you but I just lost 7% of my retirement account in a single day. I am not a Wall Street fat cat. I am a small business owner with great credit who now has trouble finding needed capital to keep my business running properly. Wait until the credit markets get tighter or close altogether. Then you will have your pound of Bankers flesh and no job, reduced retirement acount, smaller savings account, higher prices for everything, and foreign countries that have cash (oil rich) buying up the USA.
I do not pretend to know enough to know if this bill would have helped main street citizens or even the global economy. But I had hoped the bi-partisan effort was an indicator of elected officials who actually took their jobs seriously. Now, as finger pointing and accusations begin, I am sickened at the politics as usual behavior. I watched the Pelosi speech...that was not what caused the bill to fail. It failed because the Bush administration has lost all credibility...first around and world, and now in the US.
What a great understanding between democrats and Obama's choice. Can Obama be the leader of the democrats? What a shame!!!!!!!!!!!!!!!!!
You know the sad part about this entire bill is that I don't know if it's good or bad since the Administration never explained the purpose, its ramifications if it failed, the necessity for $700B, or why they wanted the bill passed without any transparency.
Why should my money bailout fatcats on Wall Street who have several homes? All the bailout would do is devalue the dollar more, making purchasing even that more difficult. As for credit...well, it's been long past due for regulation in that market (oversight on subprime loans), so the sharks don't take advantage of the disadvantaged. Will banks fail? Yes, but lending will go on, but at a more reasonable manner. I mean after we bailout Wall Street, who will bailout our failed government? Let's let Wall Street ride out the storm, and elect new officials in Washington that will truly represent their constituents and not special interests.
Rock on Obama!
Re: To provide authority for the Federal Government to purchase and insure certain types of troubled assets for the purposes of providing stability to and preventing disruption in the economy and financial system and protecting taxpayers, and for other purposes.
"I predict future happiness for Americans if they can prevent the government from wasting the labors of the people under the pretense of taking care of them."
~Thomas Jefferson
Finally...a dose of capitalism.....HEY, you hollow risk takers and speculators how do you like it now!!!....now bank chumps, you still want to lend to people who cannot pay....HA!!!...no free ride!...keep it up Congress...this may be your brightest hour!
Thank you Congress for being on the people's side and not for...who is it again...George something..hmmm...oh yeah BUSH!
Well the US Banks are finally seeing what happens when they get greedy, Its a good hard lesson I expect for all the Fat Cat Bankers. Now I hope the Bankers (Is was going to spell it with a W) in the UK have a similar lesson. You enjoyed seeing the man in the street suffer when he fell on hard times. You should have remembered to be kind to people on the way up, your going to meet them on the way down.
Good bye 35 billion a year in earned interest that we'd have gotten from borrowing at 4% on an investment that returns 10%.
Good bye Wall Street controlling the worlds financial markets
Good bye available credit
Good bye American consumer
It's been a good ride American Consumer. Way to shoot yourself in the foot. (with the gun you bought with borrowed money)
Good thing the Chinese, Japanese, and Middle Eastern funds will be able to purchase all these assets that the US government passed on.
The bailout is not a result of the Bush administration, and it failed because the republicans voted 228 against to 208 in favor. Make no mistake that Clinton signed two bills; one in 95 and 99 to get this fraudulent loan ball rolling. Go to Newsbusters.com and read both sides of the story. This is not a party issue, it is an issue of greed, fraud, and manipulation from a powerful group. I personally am involoved in a loan fraud; I've reported it and fought it, and there is NO ACCOUNTABILITY !!!! A sad time for America, but lets hope it will be brought to a close.
You sadly underestimate the fortitude of the American people. Especially those of us in the middle class. We the people that will suffer the most if Congress votes to approve this much too far reaching bill, in the form of higher taxes, regardless who becomes president, will demand that we do not pay for this, and we will demand that provisions are put in this bill that keep it from happening again. And we will persevere, whether you like it or not., through Capitalism.
I sincerely hope that the economists are wrong and this will not cause a depression as they have been predicting if this Bill didn't go through.
Any rewording may now come too late to save the US Economy from a slide into oblivion.
Yes, it didn't address the people doing it tough, but when their job is gone and inflation rockets, how much tougher will it be?
wake up
Planned my retirement on dividends and capital gains. I was determined I wouldn't live on Social Security. Lost 50% of my IRA. Looks like you young wipper snappers will have to get a second job to pay for my retirement. LOL
Wow! You just do not know anything about this bill! Unfortunately in a few months you may have wished it was passed!
I am not clear on the details but its not that difficult. What worries me are the figures I am a middle class family man who will be hurt no matter how much my taxes go up my estimated out of pocket expense is 583.00 per month there goes my sons college fund. I will also no longer be middle class You either will be rich or poor. I say lets just ride it out . I also fell that we were sold thecrash if this bill hadnt been talked about thestock market wouldnt be at its lowest since 9-11. Terrorism comes in all forms
The Federal Reserve is out to enslave us all in this debt
They are solely responsible for the current 'economic crisis'
and the crash that followed the announcement of the Failure
to pass the Bill through the house of representatives
The Federal Reserve has 700 Billion to loan to the US to help
'keep things the way they are - for awhile', of course this loan
too needs to be secured by increasing 'US Income Taxes'
WTF !?!
The fact that this Bank has 700 Billion to loan (at interest),
is in itself very disturbing indeed - This bank finances
entire countries, wars, and economies through debt
Too much power - and you know the Golden Rule:
"He who has the gold, Makes the rules"
NOTE: The Federal Reserve is NOT part of the US government
The Federal Reserve is a 'Private Bank'
The US National Debt + interest is owed to the Federal Reserve,
In fact, the fortune held at the US Gold Repository was taken
as security for the loans that make up the US National Debt
All war finances loaned from the Federal Reserve, and secured by 'US Income Taxes'
If you doubt ANY of this - Look it up for yourself !
You won't have to dig - this is 'Common Knowledge'
that has been diffused and distracted
Empower yourself with the truth - wake the sheep !
I have watched and said for three years that the Dow is too high in value. When the dow hits about 5700, it will be of realistic value.
The Russian's just have to be loving this. The world economic superpower comes crashing down. This is very reminiscent of what happened to their economy with the fall of the Soviet Union. Anyone who has ever wished bad will and wanted to take us down a few notches must be just overjoyed. We counted on business to do the right thing. We counted wrong. "The U.S. Economy taken down by a bunch of greedy thugs in pinstrips with brief cases." What is wrong with this picture? Part of this lies at the footsteps of both parties who have kept a "hands off" approach and not enacted solid safeguards and regulations. Now these same yahoos have no clue on how to fix the problem. I feel whatever they come up with will only be a bandaid and not a permanent solution. Brilliance, Just Sheer Brilliance.
With our government and corporations so big there is an obvious lack of any real serious control.How can you control them? They open up a maze of paths for greed and coruption so vast that the right hand never knows what the left hand is doing and vice-versa.Lack of knowledge of how the finacial markets have been carrying on business without any real regulation has gotten us into this mess.And now,the lower and middle classes are being told to sit in the corner, be quiet and just cough up the tax money. It's time for the common citizen to stand up and be heard.They shouldn't be afraid to take a stand against the elite of our government and corporations. They {the government}don't seem to have any real control on things as they now stand and don't seem to worry about anything else but their own good.Where is the protection for the common working stiffs of our proud country ? Have we truly been forgotten by the rich and powerful members of our citizenry who make up the members of the nation's finacial corporations and the government ? Something need to be done to solve our financial problems but shouldn't the Congress include the common citizen to seriously help regulate the money and have a oversight group made up of some people not professional politicians and business types? Or,do we remain as puppets being totally controlled by them ?
Dont fused too much politic in your economic crisis.It will just add injury.. more severed than the GREAT DEPRESSION of 1930
This bailout failed not because of the President, but because some members in Congress finally realized that their job was to PROTECT the CITIZENS from this kind of robbery.
Pelosi wrote a check her influence couldn't cash, this bill had no upside to it what so ever, and I think for that money we the people should get something in return, but there wasn't anything for the people, just fat cats getting golden pararchutes.
What worry is it to me if this long time Wall Street group goes under? There are numerous others that, didn't make stupid mistakes, and take idiotic risks, and are now taking advantage of this by buying these failing institutions.
Bailing out banks that made sub prime loans is not going to teach them anything, but it will raise my taxes. Bailing out some investment firm that bought HUGE amounts of CDS (credit default swaps) will not teach them anything, but it will raise my taxes.
The only way to get this kind of money is by GUTTING education and Medicare, and restructuring Social Security, so in the end it is US the blue collar worker that gets the crappy end of the stick. So yeah I am all for them killing this bail out.
Let Wall Street finally look to itself for help instead of my pocket for a change.
WOW wouldn't it be great if this were the end of Special Interest?
Nah that would really be the end of Government politics.. lol
YOU realize the US is 25% of the WORLDS GDP right? as the US goes SO goes the world.
If we tank, everybody is coming in with us, but the funny thing is, the other countries will hit bottom before we do, way way way before us.
Besides with this country having a $14 TRILLION GDP and a debt of $8.5 Trillion, it still leaves us with more left over than just about every other country on the planet has for their entire GDP, so we can ride this out, and we will get out of it better and stronger than ever.
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