THE BASIS POINT

House Rejects Bailout, Reconvening Oct 2. Dow Drops Most Ever 778pts, US Stocks Lose $1.1 Trillion

CSPAN House VoteWith a vote of 228 Nay to 205 Yea, the House of Representatives voted against the Treasury’s proposed financial market bailout plan—see below for unprecedented drops in markets. House Financial Services Committee Chairman Barney Frank said that they will see how markets play, and reconvene this Thursday October 2. Partisan bickering took precedence over the decision process. GOP members attacked Nancy Pelosi for what they perceived as a partisan speech that may have swayed them:

“We could have gotten there today had it not been for the partisan speech that the speaker gave on the floor of the House,” House Minority Leader John Boehner said. Pelosi’s words, the Ohio Republican said, “poisoned our conference, caused a number of members that we thought we could get, to go south.”

In response, Barney Frank said:

“Well if that stopped people from voting, then shame on them,” he said. “If people’s feelings were hurt because of a speech and that led them to vote differently than what they thought the national interest (requires), then they really don’t belong here. They’re not tough enough.”

 dow-sept-29-biggest-point-drop-everCouldn’t agree more, that GOP reaction is personal and has no place given the gravity of this market situation. The market reaction speaks for itself, as US stocks lost $1.1 trillion in market value and closed as follows:

  • Dow down 778, -6.98%. Biggest point drop ever.
  • S&P down 107, -8.8%. Biggest point drop since October 1987.
  • Nasdaq down 200, -9.14.

That said, perhaps the lawmakers need to see this market reaction to understand the seriousness.