Changes

On September 19, 2008, the Treasury and Federal reserve proposed a rescue plan, whereby they would purchase $700 billion of the CDOs. The assumption was that the underlying mortgages were good in the long run, but that a short-run panic had destroyed the market for them and frozen the financial system.  The bailout was needed, President Bush said, to avert a major disaster for the economy.  Democrats signed on to the bailout plan, adding provisions for Congressional oversight and caps on CEO compensation; but at the last moment on Sept 25, 2008 House Republicans said no, and GOP presidential nominee [[John McCain]] held off endorsement.   

On September 19, 2008, the Treasury and Federal reserve proposed a rescue plan, whereby they would purchase $700 billion of the CDOs. The assumption was that the underlying mortgages were good in the long run, but that a short-run panic had destroyed the market for them and frozen the financial system.  The bailout was needed, President Bush said, to avert a major disaster for the economy.  Democrats signed on to the bailout plan, adding provisions for Congressional oversight and caps on CEO compensation; but at the last moment on Sept 25, 2008 House Republicans said no, and GOP presidential nominee [[John McCain]] held off endorsement.   

Conservatives were split on what to do.  Many agreed with Bush that the bailout proposed by Treasury Secretary [[Henry Paulson]] was urgently needed. Large banks and corporations strongly endorsed the bailout.  Senator ]]Barack Obama]] endorsed the plan. On the other hand, ordinary taxpayers and "Main Street", that is businessmen who operated at the local level, were highly suspicious of Wall Street. McCain, blaming the crisis on "the corruption and manipulation of our home mortgage system", rejected the bailout. Believers in the market economy insisted that the market should run its course, and opposed the bailout.<ref> See comments from a range of economists at [http://www.nytimes.com/2008/09/26/business/26assess.html?ref=business Peter S. Goodman, "Credit Enters a Lockdown," ''New York Times'' Sept. 25, 2008]</ref>

Conservatives were split on what to do.  Many agreed with Bush that the bailout proposed by Treasury Secretary [[Henry M. Paulson]] was urgently needed. Large banks and corporations strongly endorsed the bailout.  Democratic nominee Senator [[Barack Obama]] endorsed the plan, as amended by Congressional Democrats. On the other hand, ordinary taxpayers and "Main Street", that is businessmen who operated at the local level, were highly suspicious of Wall Street. McCain, blaming the crisis on "the corruption and manipulation of our home mortgage system", rejected the bailout as a favor for Wall Street and little help to Main Street. Believers in the market economy insisted that the market should run its course, and opposed the bailout.<ref> See comments from a range of economists at [http://www.nytimes.com/2008/09/26/business/26assess.html?ref=business Peter S. Goodman, "Credit Enters a Lockdown," ''New York Times'' Sept. 25, 2008]</ref>

Also on Sept. 25, Washington Mutual, the 6th largest bank in the US with $300 billion in assets, went bankrupt. Its stockholders lost all their money, the US government took it over (through the [[FDIC]], which insures ordinary bank deposits), and resold it the same day to the biggest New York bank, JPMorgan Chase. It was the largest commercial bank failure in American history, by far.<ref>In the [[Great Depression]], no major banks failed in any major cities, although over 6000 small neighborhood and rural banks went under; depositors eventually received on average 85% of their deposits.</ref>

Also on Sept. 25, Washington Mutual, the 6th largest bank in the US with $300 billion in assets, went bankrupt. Its stockholders lost all their money, the US government took it over (through the [[FDIC]], which insures ordinary bank deposits), and resold it the same day to the biggest New York bank, JPMorgan Chase. It was the largest commercial bank failure in American history, by far.<ref>In the [[Great Depression]], no major banks failed in any major cities, although over 6000 small neighborhood and rural banks went under; depositors eventually received on average 85% of their deposits.</ref>