Bailout Plan Rejected - Supporters Scramble

By Chris Isidore, CNNMoney.com senior writer
Last Updated: September 29, 2008: 6:40 PM ET

NEW YORK (CNNMoney.com) -- The fate of the government's $700 billion financial bailout plan was thrown into doubt Monday as the House rejected the controversial measure.
The next steps were unclear. The abrupt defeat left the Bush administration and congressional leaders scrambling to figure out whether to renegotiate the bill and introduce it again as soon as Thursday or to try other options.
Stock markets reacted violently. Investors who had been counting on the rescue plan's passage sent the Dow Jones industrial average down well over 700 points. The stock gauge closed 778 points lower - nearly 7%. (Full coverage)
The measure, which is designed to get battered lending markets working normally again, needed 218 votes for passage. But it came up 13 votes short of that target, with a final vote of 228 to 205 against. Two-thirds of Democrats and one-third of Republicans voted for the measure.
President Bush, who earlier in the day said he was confident the bill would pass, said he was "very disappointed" by the House vote. Treasury Secretary Henry Paulson, speaking at the White House, said he will continue to "use all the tools available to protect" the economy.
Republican leaders, who had pushed their reluctant members to vote for the bill, pointed the finger for the failure at a speech given Monday by Speaker Nancy Pelosi, D-Calif.
Pelosi, speaking on the House floor, had blamed the nation's economic problems on "failed Bush economic policies."
House minority leader John Boehner, R-Ohio, said after the vote that passage would have been possible if it had not been for Pelosi's "partisan speech."
Rep. Barney Frank, D-Mass., one of the main congressional negotiators, dismissed the GOP claim that Pelosi's speech was responsible for Republicans voting against the bill. "Because somebody hurt their feelings, they decided to hurt the country," Frank said. "That's not plausible."
'Our time has run out'
The four-hour debate that preceded Monday's vote included impassioned pleas for and against the measure from Democrats and Republicans alike. Party leaders told members that the only way to protect the economy from a spreading credit crunch was to vote for the difficult-to-swallow measure.
"Our time has run out," said Rep. Spencer Bachus, R-Ala., the ranking Republican on the House Financial Services Committee. "We're going make a decision. There are no other choices, no other alternatives."
Added Frank: "Today is the decision day. If we defeat this bill today, it will be a very bad day for the financial sector of the American economy."
Boehner told his members, many of whom objected to the measure, that they had to accept something he and many of them found distasteful.
"If I didn't think we were on the brink of an economic disaster, it would be the easiest thing to say no to this," Boehner said. But he said lawmakers needed to do what was in the best interest of the country.
One lawmaker who voted against the bill, Rep. John Culberson, R-Texas, said the measure would leave a huge burden on taxpayers. "This legislation is giving us a choice between bankrupting our children and bankrupting a few of these big financial institutions on Wall Street that made bad decisions," he said. Culberson voted against the bill.
Other conservative Republicans who voted "no" argued the bill would be a blow against economic freedom.
Thaddeus McCotter, R-Mich., said the bill posed a choice between the loss of prosperity in the short term or economic freedom in the long term. He said once the federal government enters the financial marketplace, it will not leave. "The choice is stark," he said.
Some Democrats voted against the bill for not doing enough to help taxpayers facing foreclosure or unemployment and accused proponents of moving too fast.
"Like the Iraq war and Patriot Act, this bill is fueled by fear and haste," said Lloyd Doggett, D-Texas.
The runup to the vote
The debate followed a weekend of marathon negotiations between lawmakers and administration officials to hammer out legislation.
Leading House Republicans signed on to the proposal on Sunday after expressing earlier reservations.
The core of the bill is based on Paulson's request for the authority to purchase troubled assets from financial institutions, so banks can resume lending and the credit markets, now virtually frozen, can begin to operate more normally.
Democrats and Republicans - concerned about the potential cost - added several conditions and restrictions to protect taxpayers on the downside and give them a chance at some of the potential upside if the companies benefit from the plan.
The turmoil in Washington comes amid great upheaval in the nation's financial system.
Banks and Wall Street firms, worried about both their own needs for cash and the condition of other institutions, essentially stopped loaning money to one another in recent weeks. That choked off the money being made available on Main Street in the form of mortgage loans, business loans and other consumer borrowing.
The crisis stems from problems in mortgage-backed securities, which saw their value plunge as home prices have gone into their worst slide since the Great Depression and foreclosures have soared to record levels.
In turn, the market for trillion of dollars worth of those securities held by major firms evaporated, sending them down to fire-sale prices and raising the risk of widespread failures among the nation's major financial firms.
On Monday, the Federal Deposit Insurance Corp., which insures deposits at failed banks, arranged for the sale of the banking assets of Wachovia (WB, Fortune 500), the nation's No. 4 bank holding company, to Citigroup (C, Fortune 500) for $2.2 billion in stock.
That follows three weeks of other shocks: the Treasury Department's seizure of mortgage finance firms Fannie Mae (FNM, Fortune 500) and Freddie Mac (FRE, Fortune 500); Wall Street firm Lehman Brothers' bankruptcy filing; rival Merrill Lynch (MER, Fortune 500) purchase by Bank of America (BAC, Fortune 500).
In addition, the Fed bailed out insurance giant American International Group (AIG, Fortune 500), loaning it $85 billion in return for a nearly 80% stake. Washington Mutual (WM, Fortune 500), the nation's largest savings and loan, became the largest bank failure in history.
After months of attempts by regulators to fix the problems, the bailout was seen by many as the most comprehensive effort yet. Proponents vowed late Monday to keep trying.
Sen. Judd Gregg, R-N.H., a lead negotiator in the bailout bill negotiations said, "If we don't act promptly and effectively, then many people are going to lose their jobs."

First Published: September 29, 2008: 7:56 AM ET


What are your thoughts on the economic crisis? Should there be a bailout by the government? If the bailout is not passed, what do you think is going to happen? Why are these corporations failing?

The Weekend

What all did you do this past weekend? Go to the game in Moultrie? Go to church? etc.

Sleep

I went to bed at 7 pm last night! I typically don't get in bed until after 11 pm. After a week and a half of revival at church, I was TIRED. I love going to bed early, but seldom do. How late do you typically stay up? Can you tell a difference in your school work when you go to bed early or stay up extremely late? Explain.

Army Reps

How did yesterday's Army representatives influence your future choices? Are you now contemplating an army career after high school?

Legal Drinking Age

Channel One has recently been talking about the push by some to change the legal drinking age. Should it be changed from 21 to 18? Why or why not? Pros and cons to the change? Read the information on www.channelone.com.



Write a paragraph explaining your views (5 + sentences).

Track Quote

"Even if you are on the right track, you will get run over if you just sit there."

What does this quote mean to you?

Last week's College & Career Speaker

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Meghan McCain Blog

I discovered John McCain's daughter's blog this morning. http://www.mccainblogette.com/ She is 23 years old and is blogging about her experience on the campaign trail. She is on the verge of possibly becoming the President's daughter. Already she is experiencing being followed around by secret service agents, but that will become a constant part of her life if her dad wins the election. Read some of her blog. It's quite interesting!

How would you handle being constantly followed by someone? Would you welcome or resent the protection? Write on paragraph (5 sentences +) describing your thoughts.

Dog dials 911, saves owner...

PHOENIX, Arizona (AP) -- "Man's best friend" doesn't go far enough for Buddy -- a German shepherd who remembered his training and saved his owner's life by calling 911 when the man had a seizure. And it's not the first time Buddy has been there for owner Joe Stalnaker, a police officer said Sunday. On a recording of the 911 call Wednesday, Buddy is heard whimpering and barking after the dispatcher answers and repeatedly asks if the caller needs help.
"Hello, this is 911. Hello ... Can you hear me? Is there somebody there you can give the phone to," says the dispatcher, Chris Trott. Police were sent to Stalnaker's home, and after about three minutes Buddy is heard barking loudly when the officers arrived. Scottsdale police Sgt. Mark Clark said Stalnaker spent two days in a hospital and recovered from the seizure.
"It's pretty incredible," Clark said. "Even the veteran dispatchers -- they haven't heard of anything like this." Clark said police are dispatched whenever 911 is called, but that Stalnaker's address was flagged in Scottsdale's system with a notification that a trained assistance dog could call 911 when the owner was incapacitated. Clark said Stalnaker adopted Buddy at the age of 8 weeks from Michigan-based Paws with a Cause, which trains assistance dogs, and trained him to get the phone if he began to have seizure symptoms. Buddy, now 18 months old, is able to press programmed buttons until a 911 operator is on the line, Clark said.Clark said Buddy has made two other 911 calls when Stalnaker was having seizures. He said Stalnaker's seizures are the result of a head injury he suffered about 10 years ago during a military training exercise.

Copyright 2008 The Associated Press. All rights reserved.This material may not be published, broadcast, rewritten, or redistributed.

Write at least a paragraph (5 sentences) expressing your thoughts about this article. Do you have a pet you think could accomplish this?

Homecoming 2008

Write a pargraph (at least 5 sentences) about Homecoming Week 2008. What was your experience? If you're a Junior or Senior, how did this year compare to last year? Did you go to the parade, game, or dance?

Love Quote

It's better to have loved and lost, than to have never loved at all. ~ Alfred Lord Tennyson.

Do you agree? Explain.

Abandoned Baby found at Beijing's Bird Nest toilets

This article was on yahoo news this morning. It follows:

A visitor to Beijing's National "Bird's Nest" Stadium was shocked to find a new-born baby abandoned in one of the venue's toilets, local media reported on Wednesday. The baby, later identified as a girl, was found by a woman around noon on Tuesday at the Bird's Nest, which is currently holding athletics events for the Paralympic Games, the Beijing Times said.
"The woman told venue staff that there was a newborn baby in the toilet, with blood still on its body," the paper said. Volunteers and staff searched for the mother for two hours to no avail, then sent the baby to a hospital. The baby was in good health and was feeding, the paper said, citing people with knowledge of the situation, but said the whereabouts of the mother remained unclear. Authorities were investigating, the paper said.

What are your thoughts on this article? Why do you think the mother did this? Write at least a 5 sentence paragraph expressing your thoughts.

Brittney Spears & the VMAs

Did you watch the MTV's Video Music Award Show on Sunday? What did you think about Brittney Spears performing? Who was your favorite performer? Do you watch it for the music or just to see what the artists are going to wear or say? If you didn't watch, why not?

Actually, I didn't watch it, but have just noticed some mention of the award show on every news page on the web...and wonder if Brittney Spears really thinks she can have some kind of great comeback after the world just wondering if she's completely psycho -- shaving her head, drug overdose ER rants, improper care of her kids, etc. I honestly think she's a horrible role model and wonder what MTV is doing promoting her so.

Sick Days

I wouldn't normally share such personal and disgusting news *haha*, but last night I was up vomiting. Typically, I wouldn't be here today because I still feel rather sickly, but with the new policy regarding substitutes in place I felt I must come to school today even though I have at least 12 sick days left for the year. If you haven't heard, your teachers will no longer be able to call in a sub due to budget issues at the Board of Education. Instead, the teachers that are at school will have to cover a teacher's class when a teacher is absent. How do you think this will affect your teachers and you?

Write at least a 5 sentence response.

Opinion of Blogging

So far, how do you like blogging? State your thoughts in at least 2 complete sentences. Then, make sure you have 14 blogs (no more, no less) posted on your blog. These blogs have to appear when you click "view blog".

Have a good weekend!

Pet Peeve

pet peeve (noun ) (Origination Date: circa 1919 ): a frequent subject of complaint

List 3 of your pet peeves.

A few of my own include:

• People sticking their gum on the side of their dinner plate...rude and disgusting.
• Toothpaste remains left in the sink.
• Students trying to sneak out and leave before the bell rings for class dismissal...just stay in your seat!

Female VP

Republican presidential nominee John McCain chose Sarah Palin as his running mate last week. What are your thoughts on his choice? How will it affect his campaign? Do you think Hillary Clinton's supporters will be drawn to McCain since Palin is a female?

Teen Pregnancy

As everyone has observed, teen pregnancy has been on the rise over the past 2 years. Why do you think this has happened? Is it related to peer pressure? Accidental? Planned?

Please write a one paragraph (at least 5 sentences) response. Your response should not include specific people's names or contain graphic or vulgar wording.