White House, Lawmakers Plan New Bailout

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WASHINGTON - Congress and the White House are starting over again today. They want to come up with a new rescue package that will get through Congress.

And Wall Street will have to approve of any new plan as well, because everyone agrees - something has to be done to help the economy. 

 What's in store for the U.S. economy? Watch CBN News Financial Analyst Drew Parkhill.

Defeat Stuns Markets

When the House reconvenes, its top priority will be hammering out a new proposal that will appeal to more lawmakers.

"We need it, we need it as soon as possible," Treasury Secretary Henry Paulson.

The stunning defeat of the government's economic rescue plan to shore up the economy caused a frenzy on the trading floor.

And it ended up costing $1.2 trillion in market value losses, as the Dow posted its biggest one day decline in history - down 777 points.

The Bush administration and key congressional leaders say the plan - that had a $700-billion price tag was necessary to keep America's financial system from collapsing.

Without it, they predict the problem could worsen, leading to an expanded credit crunch that would hurt businesses and consumers alike.

Duke Professor Campbell Harvery explained, "If we cannot generate loans, it means that the housing crisis gets worse because people can't get a mortgage. It means that small and medium businesses - those are the ones that are squeezed the hardest by a credit crunch.

"If they're cut off." He said, "then we're going to see a much higher rate of unemployment, and basically the real economy going into deep recession."

Economic 911?

The situation is so uncertain, one analyst says 'an "economic 9/11" could lie ahead thanks to the vote against the rescue measure - which was unpopular among voters.

One investor said, "I don't think that it should be done, but it has to be done. It's a necessary evil, I guess, is a way to put it."

Lawmakers come back to the table tomorrow.

If they don't find a solution, many analysts predict taxpayers could wind up paying one way or the other - either now for a rescue measure, or in the future, with more failures on Wall Street and more pain on Main Street.

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CBN News
John Jessup

John Jessup

CBN News Washington Correspondent

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