POSTED: 12:38 am PDT September 30, 2008
UPDATED: 1:20 pm PDT September 30, 2008
The Dow bounced back on Tuesday, a day after a historic 777-point decline linked to the failure of the financial rescue package.
The Dow closed 485 points up, as carnage on Wall Street often attracts bargain hunters.However, the seized-up credit markets where businesses turn to raise money showed no sign of relief. A key rate that banks charge to lend to one another shot higher, a tightening of the availability of credit that could cascade through the economy.And questions remain about how Wall Street will move ahead without a bailout plan, though caution will likely best describe the pace.It's likely that investors will continue to cast one eye toward Capitol Hill, hoping lawmakers resurrect the government's bailout effort and absorb soured mortgages weighing down the balance sheets of banks.Concerns over those bad debts are making credit tighter and more expensive for businesses and consumers.Congressional leaders are trying to come up with enough changes in the administration's $700 billion financial rescue plan to persuade members who voted against it Monday to change their minds and sign on.They need to attract about a dozen votes to avoid another defeat. Senate Republican Leader Mitch McConnell said it's time lawmakers "act like grownups" and "get this done for all of the people."Both Sens. John McCain and Barack Obama are suggesting adding an increase in the federal deposit insurance limit to $250,000 as a way of boosting confidence in the banking system. Republican House aides said that might appeal to some conservatives who want to help small business owners and avoid runs on banks.Another possible change would modify accounting rules that require banks and other financial institutions to adjust the value of their assets to reflect current market prices even if they plan to hold onto them for years.Some House Republicans said the rules have forced banks to report huge paper losses on mortgage-backed securities which might have been avoided.Earlier Tuesday, President George W. Bush said the economic damage to the nation will be "painful and lasting" if Congress fails to pass a $700 billion bailout bill.He spoke a day after the House voted narrowly to defeat the massive relief measure that his administration and leading members of Congress had agreed was necessary.Bush described Monday's biggest-ever point decline in the Dow as an ominous and real sign of what is to come if the deal isn't salvaged. He said the administration will be talking with congressional leaders Tuesday about how to keep the plan alive.Bush said that "Congress must act" and that the economy is depending on "decisive action on the part of our government."Saying he is disappointed by the failure of the bill, Bush set out to assure Americans that the effort is not over."I want to assure our citizens and citizens around the world that this is not the end of the legislative process," he said.He added: "I'm confident we will deliver."Meanwhile, the White House said both Obama and McCain called Bush Tuesday morning to discuss what to do next to save the financial system.A Bush spokesman said both candidates offered ideas on what to do, and reaffirmed that the crisis needs to be addressed.Spokesman Tony Fratto described the calls as "very constructive."
| Guide: Wall Street Turmoil |
At-Risk Lawmakers Vote 'No'
Two-thirds of Congress' most vulnerable members from both parties voted against the massive economic rescue package.They opted to protect their seats on Election Day rather than follow their party leaders off a political cliff.Republican Rep. Paul Ryan of Wisconsin, who voted for it, said, "We're all worried about losing our jobs."He said, "Most of us say, 'I want this thing to pass, but I want you to vote for it, not me.'"Of the 19 most vulnerable House lawmakers tracked by The Associated Press, 13 of them voted against the bill despite pleas from their party leaders.Among the "no" voters was Rep. Nick Lampson of Texas, widely considered the most vulnerable incumbent Democrat from a heavily Republican Houston-area district. He said calls to his office ran at least 15-1 against the package.Distributed by Internet Broadcasting Systems, Inc. The Associated Press contributed to this report. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
No comments:
Post a Comment