The Legislature

During the initial votes in the House there was obvious partisan fighting along ideological lines. Both parties responded to the crisis by promoting either interventionist policies (left-leaning) or the idea that the free-market would self-correct the problems with some tough love (right-leaning). In both cases, as the crisis appeared to deepen by the day, legislators on both sides appeared to be heavily influenced by the fear, anger, and uncertainty of the American public and the apparently related results being played out in the financial markets.

On September 24th President Bush preempted legislative closure by announcing that fundamental understandings on the bill had already been reached between the White House and congressional leaders. House and Senate Democrats appeared to jump on the bandwagon in order to appear in accord with the Bush administration, and eagerly supported the bill with a prediction that it would be signed by later that week. This was apparently what caused a backlash from congressional Republicans who wanted to appear diligent with taxpayer money, and vowed to defeat the bill unconditionally.

All of these arguments played out on national media, and had instantaneous effects on the financial markets (CNN Money, 2008). Accordingly, American public opinion grew to a dull roar as well in either support or in opposition to the bill. This public opinion appeared to shape the legislation directly; Senator Sherrod Brown of Ohio received 2,000 emails and phone calls a day from constituents who overwhelmingly opposed the bailout (Stolberg, 2008). Senator Dianne Feinstein of California received a total of 39,180 emails and calls from constituents (again, most of whom opposed the bailout).

While congressional leaders reacted to the public outcry, Wall Street started fluctuating wildly. On days such as September 19th when news of a possible bailout emerged, the U. S. stock market surged by 3%, and foreign markets saw corresponding gains (Twaronite, Levine 2008). Conversely, while congressional debates raged and the markets observed opponents of the bailout make their case, there were days of devastating losses on Wall Street. On September 29th after the failure of the bill to pass the House during the initial vote, Wall Street suffered the largest single-day percentage drop in value since Black Monday in 1987 (Carlson, 5).

This also coincided with a desperate buyout of Wachovia Bank by Citigroup in order to prevent a collapse. All of these externalities appeared to make congressional decisions even tougher, as shown by the slow deliberation, ideological rancor, and panicked flailing of political party leaders during the last weekend in September. Moreover, the situation was a perfect display of the strengths as well as the folly inherent in the American political system that has entered the 21st Century: feedback loops from the public and private sector seemed to have immediate and appreciable impacts on legislation, particularly in times of crisis