Market Crashes 7%September 29, 1998 14:05 Stocks skidded Monday afternoon, with the Dow's nearly 778-point drop being the worst single-day point loss ever, after the House rejected the government's $700 billion bank bailout plan.
Stocks tumbled ahead of the vote and the selling accelerated on fears that Congress would not be able come up with a fix for nearly frozen credit markets. The frozen markets mean banks are hoarding cash, making it difficult for businesses and individuals to get much-needed loans. (Full story)
According to preliminary tallies, the Dow Jones industrial average (INDU) lost 777.68, surpassing the 684.81 loss on Sept. 17, 2001 - the first trading day after the September 11 attacks. However the 7% decline does not rank among the top 10 percentage declines.
The Standard & Poor's 500 (SPX) index was down 8.7% and the Nasdaq composite (COMP) 9.1%.
"The stock market was definitely taken by surprise," said Drew Kanaly, chairman and CEO of Kanaly Trust Company, referring to the House vote. "If you watched the news stream over the weekend, it seemed like it was a done deal. But the money is being held hostage to the political process."
Stocks had fallen from the get-go Monday morning. In addition to expectations for the bailout, there was also news that troubled Wachovia had to sell its banking assets to Citigroup. A number of European banks also collapsed.
But the possibility that the House won't pass the bailout plan caused stock losses to accelerate.
Nasa Bill Boosts Budget $2.6B, Adds FlightSeptember 27, 1998 23:13 The decision to keep flying the space shuttles beyond their current retirement date would rest with either Barack Obama or John McCain under a major NASA bill approved Saturday that lets the next president decide the fleet’s fate.
The NASA Reauthorization Act passed on a voice vote in the House during an unusual weekend session held as Congress tried to wrap up for the year.
The measure authorizes $20.2 billion for next year’s NASA budget. That’s about $2.6 billion more than what President Bush had proposed for the agency and includes $1 billion specifically for work to accelerate development of the Constellation program, which will eventually replace the current shuttles. The measure also adds an extra flight to the shuttle’s current schedule to deliver a physics project, the Alpha Magnetic Spectrometer, to the International Space Station.
The Senate approved the bill earlier this week. The measure now heads to the White House, which said that Bush plans to sign the bill. The president threatened to veto the measure earlier this year, mainly because of its increased cost and because it indefinitely extended the life of the shuttle.
Because the bill is an authorization bill, it provides no actual money. However, the measure “sends a strong message to the next administration that Congress believes in investing in a balanced NASA program of science, aeronautics and human space flight,” said Rep. Bart Gordon, D-Tenn., who chairs the House Science and Technology Committee.
Oil Shale Gets Green Light Because Congress Didn'T ActSeptember 25, 1998 20:21 Oil shale production on federal lands in the West will be allowed to move forward starting Monday after Congress failed to re-enact a ban on finalizing a leasing program.
But some Democrats warned Wednesday they may replace moratoriums as soon as Congress reconvenes in January.
Congress' decision to let the moratorium lapse brought cheers from companies seeking to turn the rock deposits in Utah, Colorado and Wyoming into synthetic fuel.
"It's good for the industry," says Jeff Hartley, a consultant to several Utah-based energy companies. "It's really good for the state of Utah."
But Hartley argued that if the ban resumes in three months the American people would suffer.
Bush: Bailout Plan Necessary To Deal With CrisisSeptember 24, 1998 20:06 President Bush, saying "our entire economy is in danger," urged Congress to approve his administration's $700 billion bailout proposal.
Failure to act quickly on the bailout plan could result in a "long and painful recession," Bush warned.
"We're in the midst of a serious financial crisis, and the federal government is responding with decisive actions," Bush said in a televised address Wednesday night from the White House.
Bush pointed out that the collapse of several major lenders was rooted in the subprime mortgage market that thrived over the past decade.
He said passage of the $700 billion bailout proposal was needed to restore confidence in the market.
"I'm a strong believer in free enterprise, so my natural instinct is to oppose government intervention," he said. But "these are not normal circumstances. The market is not functioning properly. There has been a widespread loss of confidence.
"Without immediate action by Congress, America can slip into a major panic."
The Associated Press: House Approves Anti-Speculation MeasuresSeptember 21, 1998 17:31 Ignoring a presidential veto threat, the House on Thursday approved measures aimed at curbing speculation in oil and other commodity markets. It said federal regulators now don't have the tools or manpower to track trading abuses.
The bill, passed by a vote of 283-133 and sent to the Senate, is aimed at certain hedge-fund and large institutional investors as well as electronic trading through overseas entities that avoid U.S. government scrutiny.
It would give the Commodity Futures Trading Commission authority for more staff and for limiting the stake traders hold in certain markets. It also would require new reporting and other limits on traders including the foreign trading boards.
The bill now goes to the Senate, which is grappling with broader energy legislation focused on offshore oil drilling and it's not certain whether the speculation issue will be wrapped into that effort, or even if an energy package will be passed before Congress leaves town, perhaps as early as the end of next week.
And the likelihood of the anti-speculation measure becoming law is anything but certain.
The White House said in advance of the House vote that President Bush is likely to veto the bill if it reaches his desk.
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