The first TARP vote failed and the markets sunk.

[Renew Deal]

Do you all remember the first TARP vote? It failed because Democrats didn't want to pass it on their own. Markets took a huge hit, though not catastrophic. There is history with many of the same people in congress of playing with fire.

First House vote, September 29

Just after midnight Sunday, September 28, leaders of the Senate and House, along with Treasury Secretary Paulson, announced a tentative deal had been reached to permit the government purchase of up to $700 billion in mortgage backed securities to provide liquidity to the security holders, and to stabilize U.S. financial firms and markets. The bill was made final later that Monday morning.<4><136> A debate and vote was scheduled for the House for Monday, September 29, to be followed by a Senate debate on Wednesday.<137> In an early morning news conference, on Monday September 29, President George W. Bush expressed confidence that the bill would pass Congress, and that it would provide relief to the U.S. economy. A number of House Republicans remained opposed to the deal and intended to vote against it.<138><139><140>

That same day, the legislation for the bailout was put before the United States House of Representatives and failed 205–228, with one not voting. Democrats voted 140–95 in favor of the legislation, while Republicans voted 133–65 against it.<141><142><143> During the legislative session, at the conclusion of the vote, the presiding chair declared the measure, HR3997, to be unfinished business. The bill is subject to additional legislative action.<144>

House Speaker Nancy Pelosi said at a press conference after the vote: "The legislation has failed. The crisis has not gone away. We must continue to work in a bipartisan manner."<145> Senate Banking Committee Chairman Christopher Dodd, a Connecticut Democrat, appearing at a joint press conference with Senator Judd Gregg, a New Hampshire Republican, said a bailout plan could still pass Congress. Dodd said: "We don't intend to leave here without the job being done. While it may take another few days, we're confident that can happen."<141>

Market reaction to September 29 vote

Following the House vote, the Dow Jones Industrial Average dropped over 777 points in a single day, its largest single-day point drop ever.<146> The $1.2 trillion loss in market value received much media attention, although it still does not rank among the index's ten largest drops in percentage terms. The S & P lost 8.8%, its seventh worst day in percentage terms and its worst day since Black Monday in 1987. The NASDAQ composite also had its worst day since Black Monday, losing 9.1% in its third worst day ever. The TED spread, the difference between what banks charge each other for a three-month loan and what the Treasury charges, hit a 26-year high of 3.58%; a higher rate for inter bank loans than Treasury loans is a sign that banks fear that their fellow banks won't be able to pay off their debts. Meanwhile, the price of U.S. light crude oil for November delivery fell $10.52 to $96.37 a barrel, its second largest one-day drop ever, on expectations of an economic slowdown reducing oil consumption and demand.<147> The Dow Jones industrial average recovered 485 points or about 62% of the entire loss the very next day.<148>

Markets which had expected the bill to pass and had moved on to debating whether it would be sufficient were already skittish after news that Wachovia Bank was being bought out by Citigroup to avoid collapse. The events were compounded by news from Europe that Dutch-Belgian Fortis Bank was given a $16.4 billion lifeline to avoid collapse, failing British bank Bradford & Bingley was nationalized, and Germany extended banking and real estate giant Hypo Real Estate billions to ensure its survival.<147>

Later in October, after the bill had been passed, the Dow Jones Industrial Average would drop by more in percentage terms, and market volatility remained at historically high levels, as measured by the VIX.

http://en.wikipedia.org/wiki/Emergency_Economic_Stabilization_Act_of_2008#First_House_vote.2C_September_29

[girl gone mad]

1. Yes, Congres used the same bullshit scare tactics to pass the disastrous TARP.

God help us if they do it again now.

[Poll_Blind]

2. I doubt many will remember this but there was actually a character who appeared here and posted...

..that if Dems didn't vote this in, he personally would lose his job. It was a great sloshing sob story and when most here didn't fall for his bullshit he posted some silly-assed "Are you happy now? I lost my job!". I doubt many recall it but it was a classic information war cornucopia of bullshit.

PB

[Renew Deal]

4. I do remember something like that.

But I can't find it.

[girl gone mad]

5. I remember that one of the posters relentlessly pushing TARP..

left a link to her MySpace page in her profile, on which she listed her occupation as bank lobbyist and also went on at length about how she hated "class warfare" because rich people were the source of all that's good and right in the world.

[Gin]

3. they found a strategy that works...