RISMEDIA, Sept. 29, 2008-(MCT/RISMedia)-In a stunning vote, the House of Representatives on Monday rejected the Bush administration’s proposed $700 billion rescue of Wall Street by a vote of 228-205. According to reports, 132 Republicans voted against plan, only 66 in favor and 138 Democrats voted in favor with 95 opposing the measure.
It was unclear what would follow, however supporters scrambled to bring the bill up for consideration again as quickly as possible. On Wall Street, even before the vote was complete, stocks began tumbling. The Dow plunged as low as 700 points before rebounding slightly.
Stay tuned to RISMedia for more information on this developing story and the impact on the real estate industry.
Events Leading up to Today’s Vote
After a tumultuous week of round-the-clock negotiations, Congress prepared for a difficult vote Monday on a sweeping $700 billion Wall Street rescue plan to stave off a possible global financial meltdown.
Racing a self-imposed 6 p.m. EDT deadline Sunday night ahead of the opening of Asian financial markets, bleary-eyed Democrats in control of Congress released the text of the Emergency Economic Stabilization Act of 2008. The plan had GOP support in the Senate, but substantially less Republican support in the House of Representatives.
Democratic and Republican leaders worked through the night this weekend to modify a plan put forth by Treasury Secretary Henry Paulson to remove distressed mortgages and similar toxic assets off the books of banks and other financial firms. Paulson had warned that credit markets are on the verge of seizing up, with grave consequences for consumer lending of all sorts.
“I am confident this legislation gives us the flexibility to unclog our financial markets increase the ability of our financial institutions to deliver the credit that will help create jobs,” Paulson said in a statement that praised lawmakers for their tough decision. “We are taking the steps needed to be ready to begin implementing this legislation as soon as it is signed.”
President Bush said in a statement Sunday night, “this plan sends a strong signal to markets around the world that the United States is serious about restoring confidence and stability to our financial system.”
In detailing legislation that grew to more than 100 pages from its original three, lawmakers Sunday afternoon chose their words carefully to let angry American voters know they’d been heard.
“It’s very clear that Americans have some reason to be concerned, even angry about where we find ourselves. We know there has been greed on Wall Street,” said Senate Majority Leader Harry Reid, D-Nev.
But the cost of doing nothing was greater than what is being proposed, he said.
“Inaction would paralyze our economy, even now it is difficult for people to get a car loan,” Reid said, adding that “the market is frozen in terms of buying homes in many parts of our country.”
House Speaker Nancy Pelosi, D-Calif., sought to assure Americans that their tax dollars weren’t rescuing the well heeled on Wall Street.
“People have to know this is not a bailout of Wall Street, it’s a buy-in,” said Pelosi in a Sunday afternoon news conference that touted taxpayer protections and an effort to limit the compensation of some Wall Street executives who might partake in the rescue effort.
One of the lead GOP negotiators, Sen. Judd Gregg, R-N.H., said he was confident the measure would attract enough members of his party in both chambers of Congress to win passage later in the week.
“I think everybody got what they needed to have,” he said.
Members of both parties supported measures to prevent so-called golden parachutes when a Wall Street executive departs. If a company has had government intervention, the five highest-ranking officials in that company will be denied bonus and incentive pay. And if a company sells as a whole $300 million or more in bad assets, there will be similar restrictions.
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