Wall Street traders watched on as the House of Representatives passed a $700 billion bail-out package.The package is designed to buy up bad debt within the financial sector. Thus bringing back confidence that banks and institutions can lend to each other.
The US economy is faltering and the desperate measures were not welcomed by all.
Many people believe that the financial institutions who made bad decisions because of greed, lending to high risk borrowers to get higher interest rates (sub-prime) should be made to pay the price.
Capitalism and free market economics does not include getting 'bailed out' with taxpayers money as part of the philosophy.
Others argue that although this is true, the bad debt is blocking average Americans from obtaining credit and the measure is needed to stop the economy going into meltdown.
Jobless figures released yesterday show US unemployment at a five year high.
As a result Wall Street closed lower despite the pacage being passed.
Act Passed
The House adopted the new version of the Emergency Economic Stabilization Act after the Senate added about $100bn (£57bn) in new tax breaks to win Republican votes.The US House of Representatives passed the bill by 263 votes to 171 on Friday.
It was the second vote in a week, following the shock rejection of an earlier version of the deal on Monday.
President Bush
President Bush said that it would take "time and determined effort to get through this difficult period".He said he believed in intervention only when it was necessary but that "in this situation, action is clearly necessary".
"Ultimately the cost to taxpayers will be far less than the initial outlay," he said.
Voter Backlash
Fearing a backlash from furious voters in November's looming congressional elections, politicians were hugely divided on the unpopular bill during the House debate.Some who had voted "No" on Monday said they were switching because of the improvements to the bill, but many of them still expressed serious reservations.Others maintained their opposition, saying the bill was still a bail-out benefiting mainly Wall Street.
“Some who had voted “No” on Monday said they were switching because of the improvements to the bill.”
The bailout package itself remains largely unchanged from Monday to Friday. The main difference is the Senate “sweeteners” added when passed by the Senate on Wednesday. The net effect is a $700 billion Wall Street bailout now includes an additional $100 billion or so for certain special interests, like the arrow tax break.
In a nutshell, the people have been sold out by their representatives. Wall Street benefits and the taxpayer and average Americans in the embattled middle class get nothing, except the bill in about 5 years. Probably with interest!