So there it was, the 700 billion dollar bail-out plan on the table and there it stayed. The House of Representatives vote on the bill was split. Of the 205 votes for there were 65 Republicans and 140 Democrats and of the 228 votes against 133 Republicans and 95 Democrats. The analysts noted that representatives looking for re-election were most likely to vote no for the unpopular bill. Republican house leader John Boehner repotedly described the package as a “crap sandwich” in his floor speech before the vote.
President George W Bush renewed calls for Congress to back the bill stating the obvious: “”We are in an urgent situation and the consequences will grow worse each day if we do not act.” Congress will not meet again until Thursday – after a break for the Jewish New Year – with another vote unlikely before the weekend, by the time an amended version of the bail-out bill will be introduced.
The US stock market reacted to both the bill failing with Dow Jones dropping 770 points as well as Mr. Bush’s speech on Tuesday when the Dow Jones rose by some 200 points. The stock markets around the world followed the wave trend and in Russia the exchange was closed for a while. The subprime mortgage crisis has hit a number of European banks, but the credit crunch is biting hard.
The EU commission released a statement calling for the US to take its responsibility and try to stabilize the markets. The EU parliament is making a formal request to the Commission to propose new legislation to improve regulation of financial markets, in particular regarding hedge funds and private equity investors. They also want measures to deal with some of the causes of the credit crunch.
The governments of Netherlands, Belgium and Luxembourg agreed to use 11.2 billion euros to save Fortis, and only today the French, Belgian and Luxembourg governments declared another bank Dexia is on the same nationalisation path with 6.4 billion euros being poured in. Meanwhile in Iceland the Glitnir bank was taken over by the government and in the UK mortgage lender Bradford & Bingley was nationalised. No doubt this next week will bring forth other similar news from around the globe.
Meanwhile in the USA there is five weeks left for the presidential elections.