Stock market drops 777 points as House votes down Wall Street bailout

The stock market dropped by 777 points today, in response to the bailout vote in Congress, its largest numerical drop in history. As a percentage of overall volume, the drop did not measure in the top ten – at least not yet. The vote was in response to widespread anger at the proposed bailout of Wall Street. Joining together were right-wing conservatives, middle-of-the-roaders and progressives. Strange bedfellows indeed.

The new proposal modified by rushed weekend negotiations contained provisions to limit corporate golden parachutes and provide greater tax-payer relief and recovery of assets with a form of IOU’s if stocks recover and can be sold for better yields. Included also were insurance measures for bad debts to allay conservative concerns. However when the votes were cast, these provisions were not nearly enough to prevent a Republican revolt from the leadership of George Bush and John McCain, the main cause of the victory of today’s naysayers, The House rejected the package 228 – 205. 133 of the no votes came from Republicans. Only 65 Republicans voted in favor of the measure.

New York Times reporter David Herszenhorn commented that the 65 Republican votes was the “operative number.” The Democrats he continued knew that they needed a bipartisan vote in order to win. Bush and McCain in an enormous display of lame-duck weakness and Republican disarray were unable to muster the needed votes.

House members, up for re-election in just a few weeks in the case of Republicans may have voted their fear and not their pocket books. Ideological considerations may also have played a role with some Republicans seeing the government bailout and intervention as threatening “socialism.”

Operatives in the McCain campaign were quick to blame Democrats and Barack Obama for the vote raising speculation of continuing tactical shenanigans from the Republican side. Many of the no votes came from Gingrich Republicans. Gingrich had been campaigning against the Paulson plan.

Democrats voted against the measure for still other reasons. The Cleveland Plain Dealer’s Sabrina Eaton writes that the Ohio’s “Marcy Kaptur, a Toledo Democrat, said the bill would concentrate more financial power into Wall Street megabanks.” On the other hand Dennis Kucinich, a Cleveland Democrat, said ‘the bill wouldn’t keep more people in their homes because it wouldn’t give federal authorities any ability to change mortgage terms to avoid foreclosures. If we had a plan that focuses on saving families’ homes, it would actually do more for the economy than this bill,’ Kucinich said “What’s good for Wall Street is good for Main Street? Not today.”

Similar attitudes were expressed in neighboring Michigan. The Detroit Free Press reported that Congresswoman Cheeks-Kilpatrick said ‘the legislation did not go far enough to guarantee that people facing foreclosures would be able to remain in their homes.” Kilpartrick is the chair of the Black Congressional Caucus whose annual legislative weekend ended a few days ago. Much anger at Wall Street was expressed at the event.

Justin Hyde of the Free Press wrote that before the bill was voted on Rep. John Conyers expressed big doubts. Asked what he thought of it, Rep. John Conyers, D-Detroit, said, ‘Not much.We’re waiting to see how much room there is for improvement,” he said, following a meeting of what some House Democrats called the skeptics’ caucus. “I can tell you we haven’t gotten one call in 10 days in support of this plan.”

Rep. Barbara Lee of Oakland also expressed similar views according to Oakland Tribune’s Josh Richman: ‘First, it does little to address the underlying problem – the foreclosure crisis. We need a moratorium on foreclosures and bankruptcy reform to help people stay in their homes. Second, this bill should be paid for by the high-flying industry that created this problem.”

Richman also reported that a study done by a Berkley outfit that analyses money in politics that Democrats and Republicans who received the largest campaign contributions by banks and financial institutions – some twice – as much, voted in favor of the legislation as compared to those who didn’t:

“MAPLight found the 140 House Democrats voting “yes” received an average of $212,700 each, about twice as much as the average $107,993 for the 95 House Democrats who voted “no.” On the other side of the aisle, the 65 House Republicans voting “yes” received an average of $273,181 each, about 50 percent more than the average $181,688 for the 133 House Republicans voting “no.”

However, it would wrong to conclude that yes votes were simply a matter of campaign contributions as many progressives voted for the bailout with an eye toward the markets and the November election.