BAILOUT FAILS IN HOUSE: STOCKS PLUNGE AND CAMPAIGN THROWN INTO DISARRAY
Shocking news from the House floor this afternoon as the massive $700 billion bailout compromise, said to be destined for approval after a week of intense negotiations, failed in the midst of partisan rancor and finger-pointing among lawmakers never really on board with such a huge risk to the government and taxpayers. No re-vote was announced by Speaker Pelosi for later today, although another effort at passing some sort of bailout bill will be taken up again this week in the House.
Acrimony abounds today on Capitol Hill as blame is assigned for a potentially catastrophic failure. House Republicans, queasy about voting for the bailout but supposedly convinced by the White House and McCain’s visit to D.C. last week, revolted just as the vote went down. The GOP blamed Speaker Pelosi’s harsh anti-Bush floor speech for causing them to “reconsider” just before the final vote.
“I do believe that we could have gotten there today had it not been for this partisan speech that the speaker gave on the floor of the House,” House Minority Leader John Boehner (R-Ohio) said, adding that Pelosi “poisoned” the GOP conference.
Deputy Minority Whip Eric Cantor (R-Va.) held up a copy of Pelosi’s floor speech at a press conference and said she had “failed to listen and to lead” on the issue.
The Speaker had blasted the Bush administration in her speech and Minority Whip Roy Blunt (R-Mo.) asserted that some GOP lawmakers, who had reluctantly agreed to support the bill, might have changed their minds following Pelosi’s remarks.
Not all Republicans accepted this view, possibly embarrassed by what could be seen as punishment for all Americans over one partisan speech. House GOP leader Boehner was visibly distressed at his failure to corral House Republicans into supporting the bill. He urged them to rethink their vote when the bailout comes back on the floor.
Representative John A. Boehner of Ohio, the Republican minority leader, said there was too much at stake not to support it. He urged members to reflect on the damage that a defeat of the measure could mean “to your friends, your neighbors, your constituents” as they might watch their retirement savings “shrivel up to zero.”
The official word from both parties in the House is that negotiations to bring either the same bailout bill or legislation with further tweaks will begin immediately.
Reaction from the campaign trail is decidedly mixed. Obama spoke directly on the crisis and the bailout failure, urging Americans and the press to “stay calm” despite the alarming failure. He was in Denver at a campaign event.
Barack Obama told a crowd in Westminster, Colo., not to panic at the House of Representatives’ failure to pass the Bush administration’s $700 billion bailout bill.
“It’s important for the American public and for the markets to stay calm,” Obama said, “because things are never smooth in Congress, and to understand that it will get done.”
He called on members from both parties to get back to the negotiating table: “Democrats and Republicans in Washington have a responsibility to make sure that an emergency rescue package is put forward that can at least stop the immediate problems that we have so we can begin to plan for the future.”
But, invoking a Rocky Mountain metaphor, he warned it won’t be easy.
“It’s gong to be a little rocky. It’s sort of like flying into Denver. You know you’re going to land, but it’s not always fun going over those mountains.”
Obama said he began his campaign event late because he said he was on the phone with Treasury Secretary Henry Paulson and House Speaker Nancy Pelosi following the bill’s failure.
Speaking at the campaign event, Obama said, “The message I have for Congress is get this done. Democrats and Republicans need to step up to the plate.”
There was no specific criticism of McCain on the bailout despite the GOP nominee’s tough talk earlier today where he claimed credit for what seemed to be the imminent passage of the legislation. He had touted his campaign suspension and decision to fly to Washington for talks with the administration, Obama and House leaders. But any “deal” or personal breakthrough he had with the House GOP clearly failed in the wake of his trip, directly leading to today’s failed vote.
McCain himself has yet to speak on the failed vote. The campaign did release a statement from economic adviser Dough Holtz-Eakin on the developments, blaming Obama and the Democrats for “partisan attacks” and “putting politics ahead of country.”
“From the minute John McCain suspended his campaign and arrived in Washington to address this crisis, he was attacked by the Democratic leadership: Senators Obama and Reid, Speaker Pelosi and others. Their partisan attacks were an effort to gain political advantage during a national economic crisis. By doing so, they put at risk the homes, livelihoods and savings of millions of American families.
“Barack Obama failed to lead, phoned it in, attacked John McCain, and refused to even say if he supported the final bill.
“Just before the vote, when the outcome was still in doubt, Speaker Pelosi gave a strongly worded partisan speech and poisoned the outcome.
“This bill failed because Barack Obama and the Democrats put politics ahead of country.”
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The Cat suggests adding the following to the failed bill so as to amend it in a way which will actually pass it:
1. Add a stay on foreclosure on of mortgages for 6 months. The stay on short selling helped stop the market tailspin. Now give ordinary people a similar benefit.
2. Say that at least a quarter of any dollars spent in any rescues, take the form of insurance guarantees as the minority rebellious Republicans wanted. So if a firm wants $1 billion of overpriced mortgages to be taken onto the government`s book, then at least $250 million must be in the form of an insurance guarantee by Freddie and Fannie.
3. Allocate an additional $100 billion to the bailout package which will be used only to pay interest on mortgages of ordinary people who face foreclosure because they cannot pay the interest. This $100 billion ordinary person support fund must be recovered by increasing taxes on all financial corporations – no exceptions – until it is fully repaid to the government.
4. Say that an intensive effort must be launched immediately to hunt down any persons who broke any laws while designing and selling subprime mortgages, and lay charges against them, with suitable punishment (including significant financial penalties).
These four changes should do the trick.
…..had Congress included some language provision on the mortgage foreclosures, that may have given the needed edge of 13+ ‘yes’ votes…
…Private solutions (along with modified govt regulations) is still the “better” way to go. JP Morgan Chase just bought Wamu, Buffet invested in Goldman Sachs.
…. don’t believe the markets should continue in a free-fall but NO govt safety net for financial institutions that have more than just the privilege of wealth–it’s that perception of the rich (Wall St) robbing again from the poor (taxpayer) that enrages so many.
…On principle it was the correct way to go, vote down a weak bill…plus, it would have given way too much power in the hands of Paulson or the next Sec of the Treasury.
…in the interim, Gov Sarah Barracuda Moose Palin is reviewing her notes from the Republican Convention to see if she can come up with any more zingers for the upcoming V.P. debate with Sen Joe Biden (Palin believes in oil revenue socialism for her state because it was brought upon by the divine above.)