29 September 2008

U.S. bailout plan defeated, stocks plummet

The following is excerpted from the 29 September 2008 edition of “globeandmail.com”.

North American stock markets plunged as the House of Representatives rejected a $700-billion (U.S.) financial rescue package meant to reverse the worst financial crisis since the Great Depression.

Rank-and-file legislators from both the Republican and Democratic parties defied the advice of senior party leaders and President George W. Bush and voted against the bill, which is drawing the ire of voters as a bailout for millionaire bankers.

At about 2 p.m. EDT in Washington, 226 representatives had voted against the 110-page legislation, trumping the 207 who voted for the package.

It was unclear whether the bill would be revived before legislators end the current session to campaign for November elections.

In Toronto, the S&P/TSX sank more than 700 points, or 6 per cent. In New York, the Dow Jones Industrial Index fell more than 450 points.

The proposed bailout would have put in place an unprecedented federal program to buy up rotten assets from cash-starved firms.

The goal was to free up choked credit that was threatening to cause broader market turmoil…

Mr. Bush urged the bill's passage, saying in a White House appearance Monday morning that “every member of Congress and every American should keep in mind that a vote for this bill is a vote to prevent economic damage to you and your community.”…

Critics on the left and right said Congress was being stampeded into hasty action on a plan that wouldn't make a dent in the nation's economic woes, which have at their root a subprime mortgage meltdown and the bursting of the housing bubble, followed by a wave of foreclosures.

The legislation does not require any federal action to prevent foreclosures, although it mandates that the government try renegotiating the bad mortgages it acquires with the aim of lowering borrowers' monthly payments so they can keep their homes…