Monday, September 29, 2008

Bailout failure analyzed; the House rollcall

Monday afternoon (2:09 PM) the House of Representatives rejected the $700 bailout mortgage bailout bill. The roll call vote on HR 3997, the Emergency Economic Stabilization Act, was 228 nays versus 208 ayes.
The partisan breakdown was as follows:
Democrats: 140 for, 95 against
Republican: 65 for, 113 against, one not voting.
This above link, with a misleading bill title, offers a full roll call by last name, for supporters and opponents of the bailout bill.

This opposition to the bailout bill represents two trends. First, the Democratic opposition is composed of left flank Congressmen opposing the bill on economic populist grounds. (Examples of the Democratic opposition include John Conyers (MI) and Dennis Kucinich (OH).) The Democratic opponents see the bill as letting Wall Street figures off the hook for their misdeeds, and they see the bill as making Americans shoulder the weight for a calamity that was produced by Wall Street. The bailout has some economic provisions, such as stipulations that taxpayers will get a share of the mortgage profits. Yet, these provisions were apparently not enough for these Congress members.
Secondly, the Republican opposition is composed by conservative-economic diehards. This must be a terrible time for economic conservative purists. They woke up one day and the American political rules were inverted. The bailout calls for the state (the national government for those not versed in such jargon) to acquire risky mortgages and to --of course-- acquire those profits that the mortgage-holding U.S. government might acquire. The state takeover of financial offerings is a tremendous, unprecedented change from United States policy. It is this diversion from free-market orthodoxy that prompted John McCain to have misgivings in the bailout bill. The following quote indicates his lack of identification with the bill: "I'm confident we will have a deal . . . . How much I had to do with it, I'll let you and others be the judge."

Both factions have taken a big gamble in their stonewalling against the bailout. Stalling on a bailout poses the risk that financial markets (stocks and mortgage-holding institutions) will become shakier in coming weeks.

The Dow Jones Industrial Average fell 777 points in reaction to the House defeat of the bailout bill, its greatest one-day fall in history.
Asian markets have continued to have a negative reaction to the anxiety surrounding the U.S. mortgage institutions. The Nikkei stock index (of Japan) fell 4.64 percent in early Tuesday trading, as of 12:16 AM (Eastern US Time).

The United Kingdom government nationalized (acquired for the state) the ailing mortgage lender, Bradford & Bingley, on Monday. On the same day, the Belgium, Luxemburg and Netherlands governments (popularly referred to as the Benelux governments or nations) have put 11.2 billion euros into the ailing insurance firm, Fortis.
At the end of last week, the United States saw the largest failure of a bank, Washington Mutual. JP Morgan Chase acquired "WaMu"'s assets for $1.9 billion.

Polls put public support for the bailout at a very low level. John Hockenberry offered a figure of 30 percent for the bill, on "The Takeaway" Tuesday morning. Rasmussen on September 27 put the figure of support at 24 percent favoring the bill.

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