Why Did Congress Vote It Down?


In a stunning vote that shocked the capital and worldwide markets, the House on Monday defeated a $700 billion emergency rescue for the nation's financial system, ignoring urgent warnings from both parties that the economy could nosedive without it.

"No" votes came from both the Democratic and Republican sides of the aisle. More than two-thirds of Republicans and 40 percent of Democrats opposed the bill.

The legislation would have allowed the government to buy bad mortgages and other rotten assets held by troubled banks and financial institutions. Getting those debts off their books should bolster those companies' balance sheets, making them more inclined to lend and easing one of the biggest choke points in the credit crisis. If the plan worked, the thinking went, it would help lift a major weight off the national economy.

Why Was It Voted Down?

"This vote today was a vote between bankrupting our kids and bankrupting a few Wall Street firms,” explains Rep. John Culberson (R-TX) who voted against the bill. “This $700 billion outlay of funds seemed irresponsible.”

Culberson also tells the Fast Money traders they’re mistaken to think this is partisan politics. He says the vote was anything but partisan politics. “I’m not going bankrupt future generations when I don’t know the bailout is going to work and it gives unprecedented authority to the Secretary of the Treasury."

Culberson also tells Fast Money that he believes there will be a vote on Thursday or Friday on some version of a bill in an effort to un-seize the credit markets.

“There’s other things that can be done,” he adds. “And it’s important for people to know that we’re going to pass legislation of some sort. Those credit lines are going to be available but those of us in Congress want to deal with this in a responsible way.”

Tourniquet On The Wound

And it’s important to note some Republicans are proponents of the measure. On Sunday, Senator Judd Gregg (R-NH) threw his unconditional support behind the plan.

When it didn’t pass he told us, “The failure to put the tourniquet on the wound means the patient is going to get a lot sicker. We need to take action and we’re going to stay here and get things done. Remember we are not giving this money out, we’re buying assets that have value and we will re-sell them into the market when the market is more orderly.”

If At First You Don't Succeed

"If at first you don’t succeed try, try again,” adds White House economic advisor Keith Hennessey on Fast Money. He feels the reason the vote failed is because it’s splitting votes on both sides of the aisles.

Hennessey also tells us legislators don’t understand the impact the credit crisis will have on the nation as a whole. “Lawmakers on both sides of the aisle are having trouble putting $700 billion in taxpayer funding at risk,” he says. “If they don’t see the direct effects of doing that, they’re finding it difficult to vote for it. But I think they’re now starting to see the consequences.”

I think it’s all election politics. It seems to me 12 politicians were playing chicken, says Karen Finerman.

Politicians know nothing about running the financial system, exclaims a disgruntled Jeff Macke. They’re running their mouths are Rome burns.

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Trader disclosure: On Sept 29, 2008, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Macke Owns (MSFT), (WMT); Adami Owns (AGU), (BTU), (GS), (INTC), (MSFT), (NUE); Najarian Owns (AAPL) and (AAPL) Puts; Najarian Owns (BIIB) Calls; Najarian Owns (GS) Call Spread; Najarian Owns (MS) and (MS) Puts; Najarian Owns (NCC) Call Spread; Najarian Owns (WB) Put Spread; Najarian Owns (XLF) Straddle; Finerman Owns (GS); Finerman's Firm Owns (MSFT), (DVN); Finerman's Firm Owns (IMCL) Call Spreads; Finerman's Firm is short (IYR), (IJR), (SPY), (MDY), (IWM), (COF), (SPG, (BBT); Finerman's Firm Owns (BIIB) Calls

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