Congress Fails to act - Heaven Help Us !

by Larry Lubell

The House of Representatives, on a 228-205 vote, failed to pass the $700 Billion dollar bill seen by many as our last, best hope at rescuing the financial industry.

Over the weekend, it seemed as if our Law makers would have a moment of clarity. where they put the good of the nation over the easiest campaign slogan to sell. That they would actually "Lead" rather than take a poll; sadly that was not the case.
Too many lawmakers apparently refused to go along with the unpopular legislation with elections just five weeks away.

The compromised plan, which is designed to stabilize U.S. credit markets by freeing up some badly needed capital working and attempting to put a bottom to the crises; needed 218 votes for passage. But it came up 13 votes short. The final vote was 228 to 205 against with about 60% of Democrats voted for the measure, but less than a third of the Republicans backing it.

"We're all worried about losing our jobs," Rep. Paul Ryan, R-Wis., declared in an impassioned speech in support of the bill before the vote.

"Most of us say, 'I want this thing to pass, but I want you to vote for it — not me. "
"We're in this moment, and if we fail to do the right thing, Heaven help us," Ryan added.

After news that the deal had been done; Investors who had been counting on the rescue plan sent the Dow Jones plummeting 700 points as it became clear the measure failed to get the necessary Republican support,

"Our time has run out," said Rep. Spencer Bachus, the ranking Republican on the House Financial Services Committee. "We're going make a decision. There are no other choices, no other alternatives."

Barney Frank, D-Mass.warned: "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 and the people who will feel the pain are not the top bankers and top corporate executives but average Americans."

This crisis has been hitting the African Americans and Hispanic communities particularly hard. It was often these communities that were targeted by many of the predatory loan companies that caused many of the financial problems working through the market today. People were "UP-Sold" into homes that they could not afford, sometimes at inflated prices. The real estate brokers working with Mortgage brokers, would bend rules, find "Loop-Holes" often with a "Wink and a Nod" from banks that knew they could package these loans up and sell them in a game of "Hot Potato". Take your cut, but just don't get stuck holding the hot potato.

In 1990, Nationwide, 73 percent of whites owned homes, while that number was just 46 percent of African Americans and Hispanics. There was a push, in large part by African American lawmakers, to increase home ownership in minority areas. This was seen as a way out of being a part of the "Working poor". It was also seen as a way to stabilize an area and reduce crime. Fannie Mae was seen as a way to help get loans to those that needed them. But as is often the case, an attempt to help those in need, was seen by some as a license to steal.

There were TV shows promising riches by following others success "Buying then Flipping" homes. We were all sold on the idea that we could by a home, slap on a coat of paint, plant a few flowers, then burn a scented candle furring the open house- and in two weeks clear a $20,000 profit. Suddenly we were all Donald Trump.

All common sense legislation, and reasonable regulation was dismantled. Congress appointed the foxes to guard to henhouse, and then we trusted their monthly count of the number and health of the chickens. Each person whose job it was to check the health of the hens, just passed the responsibility down the line. Wall Street was the place stuck holding the hot potato; therefore, it is there that many will list as the "Personification of evil."

This disaster was caused by greed from the bottom up, and a complete brake-down of any "Adults" standing in the way of what were obviously bad deals.
1. Loans with no money down.
2. People that did not qualify for the loans without short-term temporary interest only ARMS.
3. Stated Income loans (A loan that encouraged lying)
4. Inflated home prices, and loans to large areas filled with new track homes where very few had any equity, and even a small fall in values would lead to collapsing prices.

JIm Cramer had been pushing hard for this bail-out plan, that he called the "Invest in America Plan." He was outraged at the inability for the Lawmakers to get this done.

"We needed it. Without it, the stock market will now reflect a series of assumptions":
1. Worldwide economic collapse;

2. A depression that is a sequel equal to the Great Depression;

3. Many, many more bank collapses than we have had already; and

4. Much more unemployment and many, many foreclosures.

"I don't want to bury the punchline, but when you add these worst-case prices together you get Dow Jones 8378, which, reluctantly, I admit is where we are going if everything fails with the plan and the economies here and worldwide are left to their own devices."

When we see the Dow Fall 770 points in one day, falling to 10,365 and falling nearly 4,000 points from yearly highs we are clearly at the point of crisis.
"On this day congress had a moment do the right thing, and they failed, Heaven help us