Observance of the Jewish holiday Rosh Hashanah will likely prevent the House from immediately revisiting its vote to reject legislation that would have empowered the Bush administration to buy billions in frozen assets from banks and financial institutions.
In the meantime, congressional leaders will continue to work out a compromise -- which two influential senators think may have more to do with House opponents coming to realize the potential repercussions to their vote than any fundamental changes to the bill itself.
Speaking at a joint press conference Monday after the House voted 228-205 to defeat the Emergency Economic Stabilization Act of 2008 (HR 3997), Sens. Chris Dodd, D-Conn., and Judd Gregg, R-N.H., said the bill was a carefully considered, bipartisan compromise. They said the legislation includes the necessary taxpayer protections and oversight of the administration's proposal to borrow $700 billion to buy distressed assets from banks and financial institutions.
Dodd suggested that the key to winning passage for the bill lies not in amending its language, but in persuading those who voted against it they were wrong.
The Dow-Jones Industrial average fell nearly 800 points Monday -- the biggest one-day point drop in history, although a smaller drop in percentage terms than stock market crashes of 1987 or 1928. More ominously to some observers, short-term interest rates shot up as banks tightened up their lending to each other, even as the Federal Reserve and foreign central banks provided billions through short-term loans and swap lines (see story).
"I think the most important numbers today are not" the 228-205 vote tally, Dodd said. "The most important numbers I think are 777, 199 and 106 -- those are the drops in the Dow, the NASDAQ and the S&P markets. Those are the numbers I think are critical. This was not the failure of a bill today, this was a failure of will, which is regrettable."
Gregg agreed, saying that "the markets today are putting a punctuation point on the fact that this economy is in deep distress, and that it needs action by the federal government" to free up the credit markets so "that Main Street America can live the typical life that Main Street America wants to live."
Gregg said that credit markets are frozen, and while the bill won't solve the entire problem, it would be "a major step toward putting a tourniquet on a patient who has suffered a severe wound so that we can get that patient to the hospital" to recover.
Monday's vote "wasn't the failure of a bill, it's the failure to understand the import of the decision" to block implementation of the bipartisan plan, Dodd said.
Before casting their votes Monday, some lawmakers noted the difficulty of voting for a bill that is unpopular with their constituents as the November election approaches.
"This was not an easy vote," Dodd acknowledged. "We don't need to conduct polls. Our constituents are not happy about this, and rightfully so.
"But I think they're also saying to us, 'I'm angry that we're in this situation, but I'm going to be angrier if you don't act and if this gets a lot worse. And don't assume that somehow that we're going to let you off the hook for not acting on this problem. If in fact I have a hard time sending my kid to college, I can't keep my home, I lose my job, and you didn't act, then I'm going to hold you accountable.' So as angry as they may be right now, they are going to a get a lot angrier, and they should, if we don't act."
Congress adjourned after the vote in order to observe Rosh Hashanah, the Jewish New Year, which began at sundown Monday and ends at nightfall on Wednesday.
While lawmakers can't legislate "over the next day or day and a half or so," Gregg said Monday, "Hopefully we can make progress on how we will legislate when we come back."
Financial markets "should not look at that as inaction," Gregg said. "It just happens to be the appropriate action to take to recognize this very important holiday."
Leaders of both houses are talking about how to move forward, Dodd said.
"Obviously, immediately after a vote like that ... things need to cool down a little bit here," Dodd said. "I wouldn't expect anything to happen in the next hour or two or even this evening.
"Our hope is that people will think about this over the next day and a half ... hopefully (we can) come back Wednesday and get a different result than we had today," Dodd said.
Others said Congress would not reconvene until Thursday.