Beyond the Bailout, What's Next? Pros Weigh In

A day after Congress failed to pass a $700 billion financial bailout plan which would have allowed the U.S. government to buy toxic assets and ease the systemic strains on financial markets, market watchers gathered on CNBC to discuss what steps need to be taken from here. Watch the accompanying videos for more:

Flight To Safety

“The banking system is now simply too small given the size of the economy. There’s not enough credit to go around right now. So we ration out the credit and we do it through very high interest rates. We need to do one of two things: either expand the banking system to meet the demand that is out there, or we need to deleverage, which is a very painful process. So as long as the banking system remains too small, we’re going to continue to have problems.”

—James Bianco, President, Bianco Research

“When there’s a financial shock, it takes a bit of time for people to cover. In 1987, it took a couple months before LIBOR had its peak. It takes time for people to calm down. So I think that even [if the bailout bill had passed] yesterday, it would have been a process, not an event to fix things. But it would have helped the money market along and the process would have been put in motion.”

—Tony Crescenzi, Chief Bond Market Strategist, Miller Tabak

Wall Street’s Angst

“The basis of any financial crisis is that you’ve got to find a safe place where people can keep their money. We used to think it was the banks but folks are coming to doubt that. So we’ve got to reassure them. And if we can do that, we can stabilize both sides of the bank’s balance sheet and that’s going to be a big step forward.”

—Larry Lindsey, CEO & President, The Lindsey Group

Pickens on U.S. Leadership

“It’s a lack of leadership—we don’t have any leadership. The whole thing is a mess…I think they’ve got to come together on the deal, that’s all there is to it. It’s got to happen. You’ve got to get the FDIC into it and that will happen too. I think it will pass [on Thursday].”

—Boone Pickens, CEO, BP Capital

Dow’s Record Drop

“If I were given the power to change one thing, I would change the mark-to-market accounting. It’s a great way to run your business if you can, but to impose it upon a business all of a sudden, where stuff is designed to be held to maturity—for example, commercial office buildings—that’s not part of the real issue we have right now.”

—Vince Farrell, Chief Investment Officer, Soleil Securities

Sen. Hatch on Bailout Fallout

“I think the bill has to be molded in a different way. If I had it my way, I would put some tax incentives in [the bailout package]. I would have a tax holiday for people...and they wouldn’t have to pay capital gains or even income taxes on any gains that they might get in the future. There are lots of things you can do as sweeteners.”

—Sen. Orrin Hatch, R-Utah, Senate Antitrust Sub-Committee

More from CNBC.com

• Crescenzi: Fear Gauges Slow to Mend Just as '87 and '98
• Why the Rally is "Bad" for Bailout Backers
• Bailout Protests Create Strange Bedfellows
• Busch: Wall Street vs Main Street
• Chadwick: Why You Should Write Your Congressman