Blame Abounds In Defeat of Bailout Bill In House
The American public's response to a $700 billion taxpayer-funded bailout for Wall Street became loud and clear at approximately 1:30 p.m. EST on Sept. 29 when U.S. Treasury Secretary Henry Paulson's bill to allow the government to buy up toxic mortgages and other bad debt from Wall Street investment banks was soundly defeated on the House floor in a vote of 228 against and 205 for.
Reportedly, the atmosphere prior to and during the actual roll call was nothing short of frenzied panic, with lawmakers from both sides of the aisle desperately trying to rally support for the controversial legislation. Their efforts came up short by 13 votes.
The interaction on Monday afternoon played in sharp contrast to Sunday evening when Republicans and Democrats appeared side by side for the media, congratulating each other after a marathon weekend of late-night meetings and discussions to reach consensus with the Bush administration on a revised version of a bailout plan for America's financial system.
Apparently, however, the camaraderie dissipated somewhere between 9 a.m. Monday morning and when it came time to actually vote on the bill. By 1:20 p.m., it became clear that the bailout package would not pass in its current form - and the financial markets responded accordingly.
First it was the Dow Jones Industrial, which experienced its worst single-day point loss ever, falling 777.68 points. Then the S&P fell 8.75% - its worst decline in more than a decade. The Nasdaq also witnessed a major set back, plummeting 9% - its biggest single day loss since the dotcom crash of 2000.
Later that day, at 5 p.m. EST, Treasury Secretary Paulson held a press conference to comment on the vote's seemingly unexpected failure. When asked if the U.S. banking system could weather the current financial storm, Paulson deferred his answer, responding instead that, “the government had significant tools in its toolkit [to help stabilize the economy] but that they are insufficient for the long term.”
Meanwhile, the House of Representatives is altering previous plans to adjourn for recess so that members can begin work on an alternative bailout bill. The New York Times and other news outlets have reported that a second House vote may be held before the end of this week.
In the interim, however, lawmakers are getting down to the business of assigning blame for the failure of the bailout bill. Much of their disdain apparently is focused on House Speaker Nancy Pelosi who reportedly did some blaming of her own in a pre-vote speech in which she cited the current administration's stance on deregulation as the reason behind the failure of Wall Street.
Following the bill's defeat, a number of lawmakers were quick to say that her words “angered” them to such an extent that their “yes” vote became a “no”.
Politicking aside, yesterday's drama on a financial rescue package for the nation stands as a sad commentary on the men and women whose job it is to provide leadership to a country in times of trouble. It also mimics the very same actions taken by many executives and investment banks on Wall Street in which egos took center stage, promises to investors were broken and now taxpayers are left to pay the price.
Our affiliation of securities lawyers is actively involved in advising individual and institutional investors in evaluating their legal options when confronted with subprime and other mortgage-related investment losses.
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