Breaking News --- Bailout defeated!; Updates added
Stocks spiraled downward as much as 685 points on Monday a $700 billion bailout of Wall Street appeared headed toward defeat in the House of Representatives.
House leaders held open the vote as they tried to sway reluctant lawmakers to support the plan, which was failing 207-226 after the vote clock expired but arm-twisting continued.
Opponents said part of the reason for the opposition from Republicans was what they termed a partisan speech by House Speaker Nancy Pelosi, said one GOP source.
"Pelosi's partisan speech has caused our members to go berserk and may cost us any remaining chance to pass the bill," the source said.
Pelosi had said that Congress needed to pass the bill, even though it was an outgrowth of the "failed Bush economic policies" of the last eight years.
Supporters of the bailout bill had said they didn't like it 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.
I'm listening to local radio hosts, including former congressman JD Hayworth, talking about this right now. Hayworth has said that they're going to try and bring it back up by appealing to those in the GOP in safe districts to reach the 218 needed to pass the bill. But the bigger story is that the Democrat caucus lost a lot of numbers in the vote. Pelosi couldn't keep her caucus together. He posits the idea that Pelosi is going to go to freshman Democrats and tell them to vote like Republicans to bring them back on board. Those members were shaky, and bolted from the caucus.
Wall Street is careening, losing 600 points in the wake of the defeat. They've jumped back up, and currently sits at around 160 points down overall for the day. That's what happens when the financial industry gets jittery, and sees that intervention isn't coming in on the white stallion.
Pelosi is getting her whips out, and assess the risk to her caucus. Boehner is likely talking to Bush and his own caucus about what they can do. Boehner could tell the president that Paulson and Cox have to go, which would help atmospherically, and might bring more Republicans back on board. The other option left is for the Senate to pass their own version. At the same time, to assuage fears, either House could pass something that quells fears of the financial industry by passing a suspension of the capital gains tax. Hayworth is correct. The House heard from the country when the people were telling the House "not no but Hell no" on this bill.
The country and the respective caucuses are looking for assurance. Not even the Heritage Foundation's plea that the bailout package was vital and needed was enough to bolster support for the bill. This rejection wasn't really a surprise to me, given how many conservative House members had shrieked about this this morning. But look at the vote count -- 206-227. (I know FOX has a different number, but I'm going off of Michelle Malkin's numbers because she live-blogged the entire debate this morning.) That means to get the necessary majority of 218 the whips on both sides are going to have to come up with twelve House members willing to change their mind if this bill is resubmitted.
One thing is for sure, this is all far from over. The House will go back and try to tweak the bill so it's more acceptable. We can expect that the House will have a long day, possibly a long night, to come up with something that is acceptable to all. KFYI has jipped into FOX's coverage of this, and Boehner has stated that this isn't about Republican and Democrat. This is about making a compromise bill that will help stabilize the industry. They're right. We need this, but if it can be improved, then that needs to be done.
Again, some "cosmetics" could be applied, such as requesting the resignation of Paulson and Cox, putting forth a capital gains cut, or an outright, limited suspension, and an appeal to safe House seats that voted "no" to switch their vote should this come back to the floor today or tonight.
Can they pull this off? I hope so. (I can't speak for Marcie because I haven't spoken with her yet, but I'm sure that blackberry text will be forthcoming.) If we want to avoid Wall street going into a tailspin then a bailout bill needs to be passed that will soothe those jittery nerves.
UPDATE: The official numbers are 205-228, and that comes directly from the House roll call vote here. Boehner, Blunt, and Cantor all pointed to Nancy Pelosi's floor speech that ticked off quite a few while this vote went down. Michelle Malkin has the "campaign speech/politicking" remarks here on a video. If there's blame to be laid for the failure of the bailout bill, it needs to be laid at her feet. She overplayed her hand, and it backfired on her. She has no one to blame but her sad, stupid self.
Memo to Nancy Pelosi -- If you want something like this to go through, you don't spew venom while the vote is going on. Bite your frelling tongue, and wait until it's all said and done to lash out.
UPDATE II: I'm getting e-mails from readers wanting to know what Nancy Pelosi said. (I've got a link above, guys, of her speaking. Of course, you readers that have said they'd rather read the statement than have their ears bleed having to listen to her.) Michelle Malkin has, at the link above, transcribed her remarks. Here they are:
When was the last time anyone ever asked you for $700 billion?
It’s a staggering figure and many questions have arisen from that request. And we have been hearing a very informed debate on all sides of this issue here today. I’m proud of the debate.
$700 billion. A staggering number, but only a part of the cost of the failed Bush economic policies to our country. Policies that were built on budget recklessness when Pres. Bush took office, he inherited Pres. Clinton’s surpluses - four years in a row budget surpluses on a trajectory of $5.6 trillion in surplus. And with his reckless economic policies, within two years, he had turned it around. And now 8 years later, the foundation of that fiscal irresponsibility, combined with an “anything goes” economic policy, has taken us to where we are today.
They claim to be free-market advocates, when it’s really an anything goes mentality. No regulation, no supervision, no discipline. And if you fail, you will have a golden parachute and the taxpayer will bail you out.
Those days are over. The party is over in that respect.
Democrats believe in a free market. We know that it can create jobs, it can create wealth, many good things in our economy. But in this case, in this unbridled form, as encouraged and supported by the Republicans — some Republicans, not all — it has created not jobs, not capital, it has created chaos. And it is that chaos that the Secretary of the Treasury and the Chairman of the Fed came to see us, just about a week and a half ago. It seems like an eternity, doesn’t it? So much has happened. The news was so bad. They described a very dismal situation.
Again, this is firebrand politicking. She alienated the very people she needed to pass this. The blame game with President Bush was uncalled for, and claiming that those policies led to "no regulation, no supervision, no discipline" from the Bush administration is a bald-faced lie. It's asinine to blame the presidency for the lack of oversight from Rep. Barney Frank and Sen. Chris Dodd, and their respective committees. A lot of blogs on the starboard side of the spectrum are highlighting this video from 2004 where Democrats insist that nothing was wrong with Fannie and Freddie, and that the mortgage lending industry was fine. We know different.
It was feckless behavior from BOTH sides (not just Democrats) that enabled this problem. Furthermore, had the Senate set aside politics for one minute, and looked at the plan assembled by John McCain reforming the industry -- Fannie and Freddie included -- we might have been able to stave this off. Nancy couldn't put politics aside today, and she's the primary reason why this bill failed. YES, I'll admit that there were plenty on both sides that had heard from their constituents, and knew that the people didn't want this passed. So again we go to the House members jittery about their reelection chances, and that is likely the biggest reason why this vote failed. But Nancy didn't help the cause with this foolish, grandstanding speech.
UPDATE III: I just found out that the above transcript is only a partial transcript. Mary Katherine Ham over at the Weekly Standard's blog has her full remarks, and it's even worse than the above that I got from Michelle Malkin. While blathering on, she repeatedly attacks the Republicans, and heaps praise on people like Barney Frank, who contributed to this crisis. No wonder why it likely turned a few Republicans off.
The other thing to note is that rumors are floating out of DC that there will not be another vote on this today or tomorrow. Why? Rosh Hashanah begins tonight at sundown, and lasts until the evening on Tuesday (I think) which means this won't be touched for at least 48 hours. So buckle-up folks, because we're in for a bumpy ride in the markets for the next couple of days.
UPDATE IV: A few people are taking exception with the idea that Nancy Pelosi's politics-as-usual speech caused people to vote against the bill. Among the notables is Geraghty the Indispensable calling BS to that argument. Let me be clear here. If there were any fence sitters while this vote was unfolding that might have been offended by her statement, it's sure to be a minuscule minority.
It's clear by looking at the roll call that the majority that killed this bill had two things in mind in voting no. Either they were, as JD Hayworth postulated earlier today when the news broke, vulnerable House members that didn't want to be hung with the responsibility of voting for this bailout. Second, they could be people that weren't vulnerable, but they had heard from their constituents, and they decided based on the opinions of those constituents, they couldn't support the bill.
Again, I stress the fact that most of those who voted knew exactly how they were going to vote today. They knew they were either for this bill, or they weren't. So I agree with Jim Geraghty that it's a cop-out for the GOP to blame Pelosi's speech. It makes more sense to admit that they they simply couldn't get everyone on board.
Also, here's an interesting tidbit from Geraghty. Nancy Pelosi is blaming Republicans. Here are the facts as he sees it, and as I realized after seeing the roll call:
Pelosi, moments ago: "The Democrats more than lived up to their side of the bargain."
Horsepuckey. Pelosi has 235 members. She needed 218. She could spare 17 members and still pass the bill.
The GOP spotted her 65 members, for a bill that made most Republicans' skin crawl in both broad outline and in terms of detail.
That meant Pelosi could afford to lose 82 Democrats.She lost 95. ...
Think about it - the majority party is insisting that the minority party is responsible for the bill not passing with a majority. Do you see the incongruency there? Why is anyone taking that argument seriously?
UPDATE: Hoyer says "we got every gettable Democrat." If so, that's stunning.
She claims her party did all the work. That's simply not true. It's obvious she had more than a few Democrats that didn't want to be saddled with the responsibility of voting in favor of a bill that the majority of the country was against, especially heading into a testy and potentially rocky election season.
This problem came to a head at the worst moment in an election year. We're 36 days away from the election, and Congress is playing the CYA game to keep their seats. Now we don't blame them for doing this, but one would think that if they were that concerned that they'd work a little harder to put together a bill that would be amicable to all those involved; especially the taxpayers who will end up footing the bill for the congressional malfeasance that gave us this problem to begin with. After all, if Congress actually hammered out a feasible solution that wouldn't hose the taxpayers as badly as this bill would have likely done, then their election fears wouldn't be nearly as bad.
We know a lot of those in the House are facing tough races, but that's no excuse not to do the job right the first time through. Obviously several in the House -- 228 to be exact -- didn't think this bill was a fair shake to the taxpayers, and they voted their conscience. You can't dislike them for that decision. Granted, it's not like Wall Street really celebrated their decision. It opened up down this morning, and it's still about 500-600 points down right now.
UPDATE V: Word is coming out that Pelosi and the Democrats will return with a bill this week after the Rosh Hashanah holiday break Larry Kudlow has some of the skinny and it doesn't look good at all:
A number of Republican House members and staff, along with others who are plugged in, are telling me that Nancy Pelosi and the Democrats will come back with a new bill that includes all the left-wing stuff that was scrubbed from the bill that was defeated today in the House.
As this scenario goes, the House Democrats need 218 votes, and they have to pick up a number of black and Hispanic House members who jumped ship because the Wall Street provisions, in their view, were too benign. So things like the bankruptcy judges setting mortgage terms and rates, the ACORN slush-fund spending, the union proxy for corporate boards, stricter limits on executive compensation, and much larger equity ownership of selling banks through warrants will all find itself back in the new bill. Of course, this scenario will lose more Republican votes. But insiders tell me President Bush will take Secretary Paulson’s advice and sign that kind of legislation.
Personally, if this scenario plays out, I would probably withdraw my support for the rescue mission and switch to plan B, which would center on the FDIC and its bank-recapitalization powers. The bank-ownership issue, in particular, could lead to heavy nationalization of America’s financial system with a three-house Democratic sweep in November.
I’m not forecasting, because I don’t know the next bill’s content. And while McCain’s polls are heading south, he could still win. But a three-house Dem sweep to implement some off the very onerous provisions being talked about could set up the end of the U.S. financial system as we know it.I’m gonna wait and see.
Obviously, the financial markets are in total collapse today. And the economic outlook is suffering.
Tough day. One of the worst I can remember.
If Democrats attempt this move it's going to pi$$ off a lot of people in this country, especially if they throw the ACORN/La Raza bunch back into the bill, and take out the provisions of the benefits being used to pay down the debt. Kudlow's right with the Plan B, which is the one presented by Rep. John Campbell last week that much of the Republican caucus liked. The FDIC-like insurance system would work to stabilize the market, and hopefully prevent more banks from going under.
But if she and her caucus roll the dice by reloading the bill with the excess liberal crap that got yanked to begin with, we'd urge the president to veto it, and send it back with instructions basically saying "Think of the people, you nitwits, and send me a real piece of legislation that not only I can suipport, but that the people of the nation -- YOUR BOSSES, remember -- also support."