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Congress says 'no'

Created:
30 September 2008
Written by:
Jonathan Eley

Wow. Just when you thought it might be safe to dip a toe in the waters, the life guards go on strike. Hardly anybody expected the House of Representatives to vote down the compromise rescue package yesterday. But it did. Why? And what now?

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Maybe all those Congressmen who voted against did so as a protest, to make a point, not expecting others to do so in such numbers. Many of them are facing re-election shortly, and publicly opposing Wall Street fat-cattery plays well to the electorate.

Perhaps politicians are just revelling in their sudden power. In an era of globalisation and liberalised finance, lawmakers have had next to no control over market forces ... until now. For once, lower Manhattan is beholden to Capitol Hill, and not the other way round.

Or maybe it really is the end of the era of deregulated markets, as some of the more excited left-wing commentators are suggesting, and what we are seeing in the corridors of power is merely a reflection of the deep anger felt in the country at large. Americans certainly understand money. This is a country where a year's tuition fees at a decent university can easily run to $40,000 (You don't believe me? Just look at NYU's suggested student budget...), where every trip to a doctor entails payment, and where the performance of your 401K savings plan has a direct bearing on your retirement. What happens on Wall Street, is not an abstract concept to Americans, as the gyrations of the FTSE are to most Brits. It is real. And real important.

And to most Americans, watching the values of their homes slide consistently for the first time since the Great Depression, Wall Street increasingly looks like another planet, where grown men are paid absurd sums of money to yell at each other in trading pits, cruise round in stretch limos, party all summer in the Hamptons, and then come begging to the taxpayer when it all goes wrong. As one Congressman put it yesterday: "They expect Joe Sixpack to buck up for this nonsense."

Alistair Blair, one of our columnists, recently remarked upon how few senior bankers had lost their jobs in the current crisis. "Where are the bankers' bodies?" he wondered. That's what's missing. Some humility. Some sense of shared pain. America's banks will get their bail out sooner or later. But the public wants some bodies first.

MORE ON THE BAIL OUT...

Despite the carnage on Wall Street last night, the FTSE has held its own. See our Markets summary.

For more on the banking crisis, see our special Banking Crisis page...

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