In defiance of President Bush and party leaders, the House on Monday rejected a $700 billion bailout of the financial industry. By a 228-to-205 vote, a coalition of mostly liberal Democrats and conservative Republicans joined together to block what would have been the largest corporate bailout in US history.
The vote shocked many investors. On Wall Street, the Dow Jones Industrial Average fell nearly 778 points — its worst single-day point loss ever. Stocks lost $1.2 trillion in value on Monday in what is being described as Wall Street’s blackest day since the 1987 crash. Despite the setback, President Bush said a new relief package for Wall Street will be put forward.
President Bush: “I was disappointed in the vote with the United States Congress on the economic rescue plan. We put forth a plan that was big because we’ve got a big problem. I’m going to be talking to my economic advisers after my meeting here with the president and will be working with members of Congress, leaders of Congress, on a way forward. Our strategy is to continue to address this economic situation head on. And we’ll be working to develop a strategy that — that will enable us to continue to move forward.”
The Washington Post described the vote as President Bush’s worst legislative defeat. On the campaign trail, both Barack Obama and John McCain called on lawmakers to support a new bailout package. The impact of the House vote was felt around the world as stock values dropped in Asia, Australia and Europe. Australian Prime Minister Kevin Rudd urged US lawmakers to approve a bailout.
Kevin Rudd: “The decision by the United States Congress not to pass the measure by the US administration for the stabilization of US financial markets is disappointing. This is a bad development. I’ve spoken this morning to the Australian ambassador to the United States, and our understanding is this measure or a similar measure will be represented to the United States Congress later this week. I’ve spoken also to the British Prime Minister this morning, Gordon Brown. The attitude that we’ll adopt and I believe other friends and allies of the United States will adopt is to urge the United States Congress to pass this or a similar measure when it’s represented to the Congress later this week. This is necessary for the stabilization of US financial markets. It’s necessary for the stabilization of the global financial markets.”
The Center for Responsive Politics is reporting members of the House of Representatives who supported bailing out the financial sector have received 51 percent more in campaign contributions from the finance, insurance and real estate sector in their congressional careers than those who opposed the emergency legislation.
Opposition on Main Street to the federal bailout continues to mount. On Monday, labor unions held another rally on Wall Street. Speakers include Ed Ott of the New York City Labor Council.
Ed Ott: “It was irresponsible what was done here. And if we put it back together, we want assurances that someone is going to watch the till. For twenty-five years, both parties have been complicit in undermining our protections, under the guise of deregulation. They have now cost us tens of thousands of jobs. It is unacceptable.”
In other financial news, the nation’s fourth largest bank, Wachovia, has been acquired by Citigroup for $2 billion in a deal orchestrated by the federal government to prevent another bank failure. The deal could cost taxpayers hundreds of billions of dollars. Citigroup is inheriting over $300 billion in Wachovia’s loans, but the government has agreed to pay any losses over the $42 billion mark. Wachovia’s sale comes just days after Washington Mutual was seized by regulators before its assets were sold to JPMorgan Chase. The fall of Washington Mutual and Wachovia leaves the nation with three superbanks: Bank of America, Citigroup and JPMorgan Chase. The consolidation may result in higher fees on everything from checking accounts to bounced checks and overdrafts and lower interest-rate yields on deposit accounts.
Meanwhile, federal prosecutors have subpoenaed Freddie Mac and Fannie Mae for documents as part of an investigation into the mortgage giants.
Attorney General Michael Mukasey has appointed a Special Prosecutor to continue the probe into whether political misconduct led to the firing of nine US attorneys. The appointment came at the request of a lengthy Justice Department investigation. Investigators singled out Attorney General Alberto Gonzales for his conduct in the firings, accusing of him of “abdicating” his responsibility and questioning his faulty and evasive public statements. Senate Judiciary Chair Patrick Leahy warned President Bush not to misuse his pardon power to benefit officials connected to the scandal.
Sen. Patrick Leahy: “The evidence in our investigation in the Judiciary Committee and the report today shows Karl Rove and others among the highest ranks of the White House were involved in the firings, and apparently they focused on the political impact of federal prosecutions. I don’t think the White House should be allowed to hide from accountability.”
The CIA’s former executive director pleaded guilty Monday to wire fraud as part of a plea bargain. Kyle “Dusty” Foggo was the third-highest-ranking official at the CIA until his resignation in 2006. Federal prosecutors accuse him of accepting up to $70,000 worth of gifts from his friend Brent Wilkes in exchange for lucrative CIA contracts. Foggo originally faced twenty-eight charges, but prosecutors agreed to drop twenty-seven of them in exchange for a guilty plea for wire fraud.
In California, federal immigration agents have arrested more than 1,100 people over the past three weeks in a series of sweeps. It was the largest immigration operation ever carried out by ICE agents in California. One ICE official described the effort as a “big surge.” Immigrant rights advocate Basil Robledo of San Jose said the raids have been traumatizing. He said, “It is a scary situation for folks in the community. People keep their kids home from school. It creates less of a willingness to talk to police. They see ICE agents, and they see a uniformed person, and that blends into all of law enforcement.”
The website Politico reports a growing number of Republicans are expressing concern about John McCain’s running mate Sarah Palin’s performance on the campaign trail and her understanding of key issues. National Review columnist Kathleen Parker has called on Palin to step aside. Parker recently wrote, “Quick study or not, she doesn’t know enough about economics and foreign policy to make Americans comfortable with a President Palin should conditions warrant her promotion.” Criticism of Palin intensified last week after her interview with Katie Couric on CBS. During the interview Couric asked Palin about the proposed $700 billion bailout of Wall Street.
Sarah Palin: “But ultimately, what the bailout does is help those who are concerned about the healthcare reform that is needed to help shore up our economy, helping the — oh, it’s got to be all about job creation, too, shoring up our economy and putting it back on the right track. So, healthcare reform and reducing taxes and reining in spending has got to accompany tax reductions and tax relief for Americans. And trade, we have — we’ve got to see trade as opportunity, not as a competitive, scary thing, but one in five jobs being created in the trade sector today. We’ve got to look at that as more opportunity. All those things under the umbrella of job creation. This bailout is a part of that.”
On Monday, Palin returned for another interview with Katie Couric, this time with John McCain. Couric questioned McCain about Palin’s interaction with a voter in Philadelphia on Saturday when she contradicted McCain’s stated position on Pakistan by saying that US troops should absolutely go into Pakistan if that’s what needed to stop the terrorists from coming into Afghanistan.
Katie Couric: “Is that something you shouldn’t say out loud, Sen. McCain?”
John McCain: “Of course, not. But, look, I understand this day and age, 'gotcha' journalism. Is that a pizza place? In a conversation with someone who you didn’t hear the question very well, you don’t know the context of the conversation, grab a phrase. Governor Palin and I agree that you don’t announce that you’re going to attack another country.”
Couric: “Are you sorry you said it?”
McCain: “And the fact” —
McCain: “Wait a minute. Before you say, 'is she sorry she said it,' this was a 'gotcha' sound bite that — well, she was in a conversation” —
Couric: “It wasn’t a 'gotcha.' She was talking to a voter.”
Outgoing Israeli Prime Minister Ehud Olmert has told an Israeli newspaper that Israel should withdraw from nearly all territory captured in the 1967 Middle East war in return for peace with the Palestinians and Syria. Olmert told Israel’s largest newspaper Yedioth Ahronoth: “(I am saying) what no previous Israeli leader has ever said: we should withdraw from almost all of the territories, including in East Jerusalem and in the Golan Heights.” More than 450,000 Jewish settlers live in the occupied West Bank and East Jerusalem, and a further 20,000 in the Golan Heights. Olmert said that traditional Israeli defense strategists had learned nothing from past experiences and that they seemed stuck in the considerations of the 1948 war of independence. He said, “With them, it is all about tanks and land and controlling territories and controlled territories and this hilltop and that hilltop. All these things are worthless.” Olmert recently resigned over corruption allegations but remains prime minister until a new government is approved by parliament. Palestinian Foreign Minister Riyad Al-Maliki criticized Olmert for waiting until now to call for an end to the settlements.
Riyad al-Maliki: “We wish we heard this personal opinion when Olmert was prime minister, not after he resigned. I think it is a very important commitment, but it came too late. We hope this commitment will be fulfilled by the new Israeli government.”
In news from Latin America, the Bush administration has suspended longtime trade benefits to Bolivia as tension continues to rise between the two countries. Washington cited the failure of President Evo Morales’s administration to cooperate in the so-called war on drugs as the main motivation for the move. Bolivia, Ecuador, Peru and Colombia have received duty-free status for most of their goods under a program dating to 1991 to help fight the illegal drug trade. But now Bolivia will have to pay more to get exports like textiles into the United States. Morales said Bolivia would immediately start looking for new outlets for exports.
Evo Morales: “I’ve asked the economic team and foreign ministry to urgently open markets with China, Iran and Libya. It’s just a question of producing more and starting negotiations.”
Police in Dayton, Ohio said no hate crime was committed when two men sprayed a gas inside a mosque filled with over 300 Muslims. On Friday night, two men reportedly approached a window at the mosque and began spraying a chemical irritant. A ten-year-old girl was sprayed in the face. According to a police report, the girl said she immediately felt burning on her face and felt “sick to her stomach.” Other children and a woman felt effects from the chemical, and the mosque had to be evacuated. On Monday, Dayton Police Chief Richard Biehl said no hate crime was committed. He said, “The men didn’t say anything to her. There was nothing left at the scene or anything that makes us believe this is a biased crime.”
And in Denver, the city’s police union has printed commemorative t-shirts joking about police brutality at the Democratic National Convention when police arrested 154 people. The shirt reads, “We get up early, to beat the crowds. 2008 DNC.” The t-shirt shows a grinning police officer holding a baton.