With No Plan B, House Reluctantly Passes Politically Risky Measure

[grytpype]

Source: Washington Post

Henry M. Paulson Jr. was in his corner office in the Treasury Department on Monday afternoon, too nervous to turn on his television, when his chief of staff poked his head into the Treasury secretary's office to tell him the stunning news playing out on Capitol Hill: The House had just defeated the Wall Street rescue plan that Paulson had helped craft.

Within minutes, Paulson was on his way across the street to the White House, his senior staff hustling to keep up, for a meeting in the Roosevelt Room with the administration's economic team. There was no time for pleasantries, and before everyone had taken their seats, the former Goldman Sachs chief began firing off options.

Should they push for an immediate vote in the Senate? Should the Democratic leaders be flashed a green light to put together a bill that they could pass on their own, without Republicans? Should they make small changes to win over the dozen or so votes they would need on a second try in the House?

Forty-five minutes into the meeting, they were joined by President Bush, who asked the one question no one had considered: If his plan is not working, what is Plan B?

Paulson looked at his boss, then delivered the answer he did not want to hear: There is no Plan B.

Read more: http://www.washingtonpost.com/wp-dyn/content/article/2008/10/03/AR2008100303849.html?hpid=topnews&sid=ST2008100303976&s_pos=

---

This is really, really scary.

[grytpype]

1. We were on the brink of total economic collapse! And maybe we still are!

It started to be a crisis a little more than two weeks ago, though for exhausted participants such as Paulson, it must seem like a lifetime. As congressional leaders assembled around the long wooden table in the office of House Speaker Nancy Pelosi (D-Calif.) shortly before 7 p.m. on Thursday, Sept. 18, many of them were thinking variations of the same lament: Here we go again.

They had been there before, sitting under a portrait of Abraham Lincoln, absorbing the latest dispiriting account of another major American financial institution going down the drain. But with every frightful word uttered now by Federal Reserve Chairman Ben S. Bernanke, the somber visage of Paulson at his side, it became apparent that this meeting was different, and worse.

In 10 minutes that shook Congress, if not the world, Bernanke laid out a scenario of financial dissolution so grave that for parts of it he swore his listeners to secrecy. The financial contagion, he said, had spread far beyond the securities companies of Wall Street to small businesses, the automobile sector and "any industry that depended on credit or loans."

These lines of credit served as arteries, Bernanke went on, employing a morbid metaphor to close his case. If they clogged completely, they would take down the system. The entire economy was "on the brink of a heart attack. We don't know when the heart attack will occur, but we know it will occur."

"I gulped," said Sen. Charles E. Schumer (D-N.Y.). "We all realized we're not in normal times."

[babydollhead]

2. I think we need an PLAN B addendum...and committee

perpetual addendum to all of these whims.

[formercia]

3. If the economy shows no meaningful change by November

The GOP is screwed.

The market has so much inertia that, even if the plan were to work, little visible change will occur by election day.

The Administration could have attempted a bi-partisan approach much earlier and could at least have spread some of the blame around.

[Zenlitened]

4. "There is no Plan B."

Not a surprise, as there never was much of a "Plan A," either.

That three-page "bailout plan" Paulson trotted out in a panic showed no evidence he -- or anyone else -- had put any thought into it.

He had since August 2007 -- at least -- to come up with something... but ended up doing his homework on the bus on the way to school the day it was due.

:wow:

[ohio2007]

5. Plan A was "do nothing." and pass the buck. senate called their bluff

jmo