The House of Representatives has finally reached a decision on President Bush’s bailout bill. The bill was narrowly…rejected. Since then, Wall Street has fallen apart…again. The Dow Jones industrial markets closed almost 800 points down. The Standard and Poor’s 500 index is off 106 points. The Nasdaq Composite Index is off almost 200 points. Citigroup also bought all of Wachovia’s assets. All of this is because the House of Representatives rejected the bailout bill.
The biggest industries to suffer today have been the technology industry and the energy industry. Worries that all of the economies around the world are slowing down have caused the slow down. Consumers around the country aren’t the only ones who were shocked by the vote. Traders of Wall Street were shocked that the bailout bill vote ended up the way it did. However, it is possible that each side will take part to negotiate a new version of the bill.
Now, let’s look at the Citigroup situation. The Federal Deposit Insurance Corporation has again facilitated another acquisition. It was announced this morning that Citigroup will acquire all of Wachovia’s banking operations. The FDIC was sure to clarify that Wachovia did not fail. It further went on to state that all of its depositors were and still are protected. This acquisition is to help Wachovia’s burdens from the mortgage loan mess.
Gas prices are still affecting our economy. The price of crude oil dropped from $106.89 to $96.37. This is because there are so many concerns about the global demand being completely weakened.
The initial bailout plan that was proposed by the Bush administration has been tweaked several times. Both sides, the Democrats and the Republicans, worked all weekend long on a bill that would please both sides. Here is what they came up with:
1. The bailout plan legislation will be expanded to include the bad assets of pension plans, local governments and small banks.
2. Includes a Republican demand that would allow the government to insure the value of some of the bad loans and toxic securities instead of buying them outright.
3. New executive-compensation limits would be part of the legislation that prevents “golden parachutes.”
4. The government would get $250 billion up front, with an additional $100 billion based on the president’s approval. The remaining $350 billion would have to undergo congressional review.
Lawmakers are confident that this new bailout bill will pass in the next few days. Until then, our economy continues to go downhill.
