The market held its breath Wednesday, awaiting the results of a Senate vote on the federal bank rescue plan which Baltimore experts said could shake up the economy yet again.
The $700 billion bailout bill was slightly different than the version struck down by the House of Representatives on Monday, a vote which sent the Dow Jones industrial average spiraling down by 777 points — its largest one-day drop.
The Senate’s version would raise the Federal Deposit Insurance Corp. cap to protect deposits to $250,000 from $100,000, among other new provisions.
Lawmakers were expected to vote on the bill after sundown, in observance of Rosh Hashanah.
The Dow closed down 19 points Wednesday as the market awaited the Senate’s vote.
The Nasdaq composite was down 1 percent.
“It’s not going to be good news if [the bailout] doesn’t go through again,” said Peter Morici, professor of finance at the University of Maryland’s Robert H. Smith School of Business.
“The thought is that there’s more support for it in the Senate, and if they pass it, it would put pressure on the House to pass it.”
If the bill fails, Morici said another major fall for the Dow could happen today.
Speaking on the Senate floor just after 3 p.m. Wednesday, U.S. Sen. Barbara Mikulski, D-Md., said the bill was necessary to restore confidence in the nation’s credit market — and she would vote for it.
However, she said those responsible for the financial crisis would face consequences.
“Wall Street ran around like they were masters of the universe. Now they’ve taken us into a black hole in our economy. While we’re looking at regulation and reform and rescue, there are those who say, ‘Are there going to be heads that roll?’ ” Mikulski said.
“Well, you bet.”
The next six to nine months are expected to be tough even if the bill does pass, said Anirban Basu, president and CEO of the Baltimore-based Sage Policy Group.
But if it fails, the short-term economic environment could be even more grim, he said.
“What’s at stake [are] jobs, corporate income, small business earnings and the strength of the nation’s economy overall,” Basu said.
“The government’s balance sheet is in some sense the last strong balance sheet left. That balance sheet is being used to prop up our financial sector.”
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