Friday, October 03, 2008

Bailout passes House by about 3 to 2 margin

The House has passed the Emergency Economic Stabilization Act 263-171. Upon Democrats it carried 172-63. Among Republicans it lost 108-91. That is, President Bush and candidate John McCain still could not carry their own party.

The vote started shortly after 1 PM and C-Span presented the vote in real time from House computers on a simple table. I guess today C-Span was more important today than soap opera (these are "Days of our Lives"). C-Span refers to Thomas (Library of Congress) for the final bill HR 1424 here.

The vote was preceded by several hours of debate, with only a few negative speeches (such as Ron Paul’s) totally ideological. Nancy Pelosi gave a “kinder, gentler” speech to call. Moran (D-VA) made a particularly technical comment about credit markets. Barney Frank was given a lot of "credit" for the "intellect" that it took to craft the bill. The revised version received 58 more votes than did the bill on Monday.

The vote took place in two phases: a 15-minute vote on the Senate amendments to HR 3997, and then a 5 minute, unanimous adoption of HR 1424 (pork included). During the 15 minute portion, many of the Republican Nay votes came toward the end, after passage was guaranteed – understandably.

The crisis has been described as a fiscal heart attack, and the Bailout as like an angioplasty. Next would be a coronary bypass!

Markets were up only slightly immediately after the vote. Markets have been very concerned about high unemployment numbers and many other fundamental problems. Later Friday, the Dow was down about 160 because of fundamentals.

Carol Loomis interviews Warren Buffett at Berkshire Hathaway. He says that only the federal government can stem the tide of de-leveraging because it has unlimited borrowing ability. He recommends that the Treasury by the toxic assets at market prices, and claims that it will eventually make money. CNN Money video link is here.

I recommend visitors read a detailed narrative of how the crisis exploded in the New York Times Oct 2, by Joe Nocera, Andrew Ross Sorkin, Diana B. Henriques, and Edmund L. Andrews. The title is "The Reckoning: As Credit Crisis Spiraled, Alarm Led to Action," link here. It's interesting how the house of cards crumbled so quickly. The artificially propped up mortgage market simply consumed all the credit that there were, and it ran out.

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