Shocking defeat for econ bailout; record stock dip
Sierra Sun and Associated Press
WASHINGTON (AP) ” In a stunning vote that shocked the capital and worldwide markets, the U.S. House of Representatives on Monday defeated a $700 billion emergency rescue for the nation’s financial system, sending stocks plummeting to their largest one-day points drop in history.
While financial experts are predicting tumultuous times for the country’s economy, Judy Hess president and CEO of Citizens Bank of Northern California said local banks are still working with local businesses that are seeking capital to grow.
“For things that are non-real estate related, some of those businesses are in growth spurts,” said Judy Hess, president and CEO of Citizens Bank of Northern California. “There’s some stability in those mainstay services ” doctors, CPA’s …. You’ll find lenders stepping up to fund that growth.”
Real estate developers are perhaps the hardest hit by the financial turmoil, said Hess.
“I would say that banks today are looking really, really deeply into the risk associated with those,” she said.
The failure of the $700 billion rescue plan for Wall Street banks sent stocks tumbling nearly 800 point Monday, but is having little effect on Citizens Bank, which is not linked to the large lending institutions that are being brought down by the collapse of sub-prime real estate loans.
“Community banks ” we were never in that business,” said Hess.
Democratic and Republican leaders alike are pledging to try again on a bailout plan, though the Democrats said GOP lawmakers needed to provide more votes.
Bush huddled with his economic advisers about a next step. The House was to reconvene on Thursday instead of adjourning for the year as planned.
Stocks began falling even before the 228-205 vote to reject the bill was officially announced on the House floor. The 777-point decline for the day surpassed the 721-point previous record, on the day after the Sept. 11, 2001, terror attacks, though in percentage terms it was well short of the drops on Black Monday of October 1987 and at the start of the Depression.
In the House chamber, as a digital screen recorded a cascade of “no” votes against the bailout, Democratic Rep. Joe Crowley of New York shouted news of the falling stocks. “Six hundred points!” he yelled, jabbing his thumb downward.
Bush and a host of leading congressional figures had implored the lawmakers to pass the legislation despite loud protest from their constituents back home. Not enough members were willing to take the political risk just five weeks before an election.
More than two-thirds of Republicans and 40 percent of Democrats opposed the bill.
The overriding question for congressional leaders was what to do next. Congress has been trying to adjourn so that its members can go out and campaign for the election that is just five weeks away.
“The legislation may have failed; the crisis is still with us,” said House Speaker Nancy Pelosi, D-Calif., in a news conference after the defeat.
“What happened today cannot stand,” Pelosi said. “We must move forward, and I hope that the markets will take that message.”
At the White House, Bush said, “I’m disappointed in the vote. … We’ve put forth a plan that was big because we’ve got a big problem.” He pledged to keep pressing for a measure that Congress would pass.
Republicans blamed Pelosi’s scathing speech near the close of the debate ” which attacked Bush’s economic policies and a “right-wing ideology of anything goes, no supervision, no discipline, no regulation” of financial markets ” for the vote’s failure.
“We could have gotten there today had it not been for the partisan speech that the speaker gave on the floor of the House,” Minority Leader John Boehner said.
Pelosi’s words, the Ohio Republican said, “poisoned our conference, caused a number of members that we thought we could get, to go south.”
Rep. Roy Blunt, R-Mo., the whip, estimated that Pelosi’s speech changed the minds of a dozen Republicans who might otherwise have supported the plan.
That was a remarkable accusation by Republicans against Republicans, said Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee: “Because somebody hurt their feelings, they decided to punish the country.”
The presidential candidates kept close track ” from afar.
In Colorado, Democrat Barack Obama said, “Democrats, Republicans, step up to the plate, get it done.”
Republican John McCain spoke with Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke before leaving Ohio for a campaign stop in Iowa, a spokeswoman said.
The legislation the administration promoted would have allowed the government to buy bad mortgages and other rotten assets held by troubled banks and financial institutions. Getting those debts off their books should bolster those companies’ balance sheets, making them more inclined to lend and easing one of the biggest choke points in the credit crisis. If the plan worked, the thinking went, it would help lift a major weight off the national economy that is already sputtering.
Monday’s action had been preceded by unusually aggressive White House lobbying, and Fratto said that Bush had been making calls to lawmakers until shortly before the vote.
Bush and his economic advisers, as well as congressional leaders in both parties had argued the plan was vital to insulating ordinary Americans from the effects of Wall Street’s bad bets. The version that was up for vote Monday was the product of marathon closed-door negotiations on Capitol Hill over the weekend.
“We’re all worried about losing our jobs,” Rep. Paul Ryan, R-Wis., declared in an impassioned speech in support of the bill before the vote. “Most of us say, ‘I want this thing to pass, but I want you to vote for it ” not me.'”
Said Boehner, after the vote: “Americans are angry, and so are my colleagues. They don’t want to have to vote for a bill like this. But I have concerns about what this means for the American people, what it means for our economy, and what it means for people’s jobs. I think that we need to renew our efforts to find a solution that Congress can support.”
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Truckee senior Ryan Flynn closed out her high school golf career as a champion.