The consequences of not passing the bailout plan—or as some in Congress and the financial world have renamed it, the "recovery" plan, are pervasive, painful, and possibly devastating. If small businesses can't borrow money to keep going, many will fail. They are the economic engine that keeps job growth steaming along. Right now, there is no job growth, only job decline. We can hardly stand by and watch record unemployment rates go up and up and up. Second, a new wave of bank failures will not only harm consumers but also drive Wall Street losses higher and higher. Third, it'll become much tougher to take out mortgages and student loans and to keep the flow of credit helping average Americans stay afloat. Last, if Congress doesn't do something, and fast, a crash in the personal credit industry comes next. People won't be able to pay off their credit card balances, and no one knows where that will take us.
Meanwhile, the Senate version of the bailout/recovery bill had some much-needed goodies for consumers to entice the protesters of last week into the "Yes, we now support the bill" category. Among the goodies are an increase in FDIC limits to $250,000 of protection for savings, up from an outmoded $100,000 amount. The 450-page proposal also includes tax breaks for business and the middle class.
Barron's writer Bob O'Brien notes:
(This, coming on a day when the national deficit is expected to eclipse the $10 trillion mark.) Other trinkets, such as an extension of jobless benefits and a homeownership tax break, might also get stapled on before a vote is taken. The expectation is that the added features would afford the legislation some momentum that would allow it to hit the Senate chamber running. (Though if significant additions of heft actually make something faster, your average business journalist ought to be able to out-run that Usain Bolt fellow.)
There's hope the stock market's response and passage by the Senate of its plan will prompt House members to reconsider their "no" votes: "Congressional staffers now say they have begun to receive calls urging support for the plan, a sharp contrast from the weekend, when calls ran overwhelmingly against it. And in a new survey by pollster Scott Rasmussen, some 33% of likely voters now support it, vs. 24% last Friday," Business Week reported.
So if you're angry, adamant, and against, please understand that the person on whom you're venting your fury is yourself.