NEW YORK Stocks plummeted on Monday as the proposed $700 billion rescue package for the financial sector failed in the U.S. House of Representatives.
KEY POINTS: * with the U.S. House of Representatives still voting, the number of members opposing the package exceeded those voting for it. * At 1:55 p.m., 226 lawmakers had voted against the bill and 207 had voted in favor. If those votes hold and the chamber gavels the vote to a close, the bill will die."
STEPHEN BERTE, senior equity trader at Standard Life in Boston:
"I can't believe they weren't able to come together and come up with a solution. Complete disaster was predicted if it didn't pass.. and it didn't pass. Everybody was expecting it to pass and it didn't pass. I can't see what the upside is right now."
RUDY NARVAS, SENIOR ANALYST, 4CAST LTD, NEW YORK:
"It is looking like it is not going to pass. It is unfortunate that they didn't pass the bill, given that the markets are really betting on this. Even though we are seeing stocks paring some of their losses there is still disappointment and complete uncertainty over what is going to happen. At the same time I am not sure what it would have done in the short term as far as helping short-term funding in the markets. It may shift focus among the Fed and the Treasury on trying to shore the commercial paper market up and other forms of short-term funding.
There is a risk of failure of the financial system, although I don't think that is going to happen. At least the bailout package gave some certainty, at least something was out there, but now the market is left to its own devices and whatever liquidity facilities the Fed has out there. But at the same time too the Fed's balance sheet is really tied up and the fact that they increased the swap line with other foreign banks only ties it up even further. We are in a situation where the market is looking around and saying what else can the government throw at us, and it is not much else right now."
CHRIS SULLIVAN, CHIEF INVESTMENT OFFICER, UNITED NATIONS FEDERAL CREDIT UNION, NEW YORK:
"Sentiment has been quite poor with respect to the bill all along, for many House members and their constituents. Hopefully they are not gaming it for political purposes and understand it's of vital importance for the financial system in the U.S. and beyond. They would do the economy and people in the U.S. a tremendous disservice. This is not to say the bill would be a definitive solution to everything we've seen but it could prevent further contagion and help stabilize the financial system and see an expansion of credit. Everything is in freefall, except Treasury bond prices which are rallying vigorously."
LOU BRIEN, MARKET STRATEGIST, DRW TRADING GROUP, CHICAGO:
"The initial reaction was obviously because of the House voting against the bill. You are seeing financial companies and stocks getting hit across the board on anticipation if this vote holds and Treasuries are reacting."
T.J. MARTA, FIXED INCOME STRATEGIST WITH RBC CAPITAL MARKETS IN NEW YORK:
"Last week we wrote that "failure was not an option", as failure to pass it would precipitate a renewed meltdown in financial markets. Congress apparently doesn't understand the stakes."
"The only ray of light is that the horse trading is not over and some of the no-voters could switch."
OMER ESINER, STRATEGIST AT RUESCH INTERNATIONAL IN WASHINGTON:
"Clearly not a good sign for the credit market and for the U.S. economy on the whole. Stocks are accelerating their losses and the dollar is also suffering. This was a very unpopular bill and the government is having a tough time selling it to the public. Politics is trumping business here."
BARRY RITHOLZ, DIRECTOR OF EQUITY RESEARCH, FUSION IQ, NEW YORK:
"It looks like it didn't pass the House. That's why you see the plummet. It looks like a bad plan is better than no plan."