Bail Is Set
The House passed the $700 billion financial bailout package by a comfortable margin on Friday, after rejecting the measure earlier in the week. President Bush signed the bill into law, and the Treasury is expected to have the program up and running in about six weeks. Even so, the Dow Jones Industrial Average sank more than 150 points, signaling that the financial crisis isn't going to evaporate just yet. The New York Times and the Washington Post each lead with the bailout becoming law, while the Wall Street Journal fronts the bailout and tops and its worldwide newsbox with the reactions of the presidential candidates to the measure.
The Los Angeles Timesfronts the bailout and leads (at least online) with a report that September unemployment numbers show the country hemorrhaged 159,000 jobs, the worst decline in five years. The NYT points out that the survey was done before the credit crunch heated up, meaning there could still be plenty of ugly surprises waiting next month.
At the same time, Wells-Fargo announced they'll be buying Wachovia after all, paying $15.4 billion for the troubled bank, according to the WSJ. The paper suggests, however, that former Wachovia suitor Citibank may still decide to fight the Wells-Fargo deal. The sale could end up costing taxpayers $74 billion in lost revenue, according to the WP, due to tax law changes.
The vote caps two weeks of intense negotiations and vote wrangling, ending with 58 members changing their votes from "nay" to "aye." The NYT profiles four House members who opposed the bill during Monday's vote. The paper followed them during the week as they negotiated the tangle of lobbyists, concerned constituents and leadership figures who all clamored for them to reverse their positions. Some changed their mind by Friday, some didn't. The WP, meanwhile, gets a little breathless with its blow-by-blow recounting of the week's drama.
The WP i nvestigates the tactics of party whips in the House, who are charged with keeping their fellow party members in line on a given vote. Some whips favor a hard sell approach, others are more diplomatic. Everyone can agree that it's a difficult and occasionally thankless chore, but for the right person the position can be a key to great power.
Online, the NYT runs a neat graphic detailing the roll call for Friday's bailout vote.
In order to get the votes to move the package, Congress added $107 billion in tax breaks for things like NASCAR, rum making, and the manufacture of wooden arrows. Many of those provisions were meant as inducements for certain members. The WP covers a few of the more notable items inside the paper.
The WSJ argues that Treasury Secretary Henry Paulson has used up much of his political capital getting Congress to go along with this.
With the politics of the deal finally over, the real policy work can begin, as the Treasury Department figures out how it'll actually implement the bailout. The plan right now is to have a small number of Treasury employees watching over the program, but to have the bulk of the work of managing assets done by Wall Street professionals. According to the WP, there are three big questions left: Who will end up managing the government's portfolio? What exactly should the government be expected to pay for a mortgage that no one else is willing to buy? And how will the Treasury get around the seemingly inevitable conflicts of interest that come with having Wall Street manage its own rescue package? The LAT cites a proposal to divide the government's assets into competing funds in order to keep costs at market value, but warns that putting the kibosh on bad deals may be a tall order no matter what.
Lest you think the credit crisis is only going to affect huge corporations and stock brokers: Think again, says the WP. The paper reports that if the credit crunch doesn't ease up in the next few months, ten to 12 states could have trouble making payroll.
Jesse Stanchak is a writer living in Washington, D.C.