In a big surprise this afternoon, the Wall Street bail-out package that has been the subject of such scrutiny since originally introduced by the Bush administration (re: Secretary of the Treasury Paulson), has been shot down by the House of Representatives, in a narrow vote of 206-227 (Note: different reports have the vote at “207-226, 205-228“).  This has caused a shakeup within the ranks of the Republican party, and caused headlines like “U.S. stocks plunge as global credit crisis spreads” to start showing up on the news wire.

Now, the leadership who brought this bill are likely going to urge people that all is not lost – another bill can be reconsidered, and even this particular bill can be re-voted on.  But that’s not going to come for at least a couple of days, and we don’t know whether legislators are going to (1) succumb to their voters and further distance themselves away from a bailout or (2) come together after having made a poignant political point.

As just reported on CBS news (a special televised report), the bottom fell out when House Republicans, supposedly upset at being kept out of high-level negotiations (mostly done by the Senate) largely voted against the bill, with 67%  of those Republicans casting ballots opposed.  House Democrats, on the other hand, were recorded as voting only 40% opposed, with 60% of Democrat members of the House voting in favor of the plan.

Was this a political opportunity for House Republicans, in a very bad election environment for them, to strike a blow against Bush and the Democrats to distinguish themselves as being “for the average citizen”?  The financial crisis on Wall Street certainly presents an opportunity to take the populist road and, incidentally, the right thing in refusing to issue a blank check to Wall Street.  The question is: will Democrats follow suit and listen to their constituents, leading to a bail-out that nationalizes the banks or protects homeowners, or is this just a temporary ploy on party of the electorally-starved Republican party?

UPDATE (2:49pm EST): As news of the defeat of the bailout plan spreads, the stock market has begun to plummet, with the Dow falling 600 points in course of 30 minutes (including falling an additional 200 points when I began updating this post).  Stories such as “Stocks Tumble as Bailout Plan Fails in House” are beginning to crop up on major news outlets, and many more are likely to come. The question is: How low will it go?

Posted under Discussion Question, Economy, People, Politics