In a moment of historic drama in the Capitol and on Wall Street, the House of Representatives voted on Monday to reject a $700 billion rescue of the financial industry.

The vote against the measure was 228 to 205. Supporters vowed to try to bring the rescue package up for consideration again as soon as possible.

Stock markets plunged sharply at midday as it appeared that the measure would go down to defeat.

House leaders pushing for the package kept the voting period open for some 40 minutes past the allotted time, trying to convert “no” votes to “yes” votes by pointing to damage being done to the markets, but to no avail.

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The stock market is falling like a rock. Credit markets remain frozen.

Right now it is 206 yes,-227 no.

218 needed to pass. they are keeping the vote open and trying to persuade people who voted no on the floor to change their vote.

How did they come up with 700 billion dollar figure for the bailout?

“It’s not based on any particular data point,” a Treasury spokeswoman told Forbes.com Tuesday. “We just wanted to choose a really large number.”

—Forbes

In “Flash of Genius,” Greg Kinnear plays Robert Kearns, a professor who invented intermittent windshield wipers. Based on a true story, Kearns claimed that Detroit automakers stole his idea and sued them in a long, drawn-out battle. Host Liane Hansen chats with Kinnear about his movie.

I caught this yesterday in the car and it made me really want to see the movie–listen and see what you think.

When the Church is allowed the freedom to exercise its ministry, which includes the right to own the material goods it needs, everybody wins, says Benedict XVI.

The Pope said this Saturday upon receiving the credentials of the new Czech envoy to the Holy See, Pavel Vosalik. The audience took place at the Papal summer residence of Castel Gandolfo.

“Hope is indeed the timeless message which the Church offers to every generation, and it prompts her to participate in the global task of forging bonds of peace and goodwill among all peoples,” the Holy Father said in his introduction.

“She does this in a special way by her diplomatic activity, through which she extols the dignity of persons as destined for a life of communion with God and with one another,” he added.

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[BOB] ABERNETHY: Father Martin, just step back just a minute and, quickly, what are the big lessons here about, maybe, things that go beyond just the bailout itself?

Fr. [JIM] MARTIN: Well, I think one thing is that, you know, these assets were highly valued because they were risky. In economics there’s a risk-return relationship, and I think one of the things we see that hasn’t been commented on is just that the CEOs sort of lost the sense of personal responsibility to their investors and, you know, to the people they were giving mortgages to. I mean, you know, you check out a lot of magazines in the past few months, they were talking about the coming collapse. It’s not, you know, it’s not as if people didn’t know this was going to happen, and yet the investment was still being made. So I think there’s a certain level, I agree with Jim Wallis, of personal responsibility that needs to be accepted by the CEOs. So in other words what I’m saying is it points out is that, you know, people really do have the responsibility for making conscientious decisions in the workplace.

[BOB] ABERNETHY: Jim Wallis, quickly.

Rev. [JIM] WALLIS: I think there’s an opportunity here for redemption. If our congregations begin to look at these questions — we ought to have adult Sunday school curriculum on money and how to be responsible in our economic lives. That could be a real opportunity for the pulpit to get involved here and start talking about what Christians and Jews and Muslims ought to do in responsible ways about how they live.

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It’s been a hell of a week for God and for Mammon. “The love of money is the root of all evil” Dr John Sentamu, the Archbishop of York reminded City bankers on Wednesday, adding, rather presciently as it turned out, “We have all worshipped it. No one is guiltless”.

Indeed, less than 24 hours after the Archbishops of Canterbury and York had ripped into global capitalism, decrying the greed of “City robbers,” it emerged that the investments controlled by the Church itself were involved in short selling ”“ because its stock was lent to enable short selling to happen and because it owned shares in Man Group, a large hedge fund manager. As a morality tale, it was almost worthy of Chaucer’s Pardoner. Radix Malorum est Cupiditas: the Root of all Evil is Money he preaches in The Canterbury Tales, making, in the process, a tidy profit.

Yet for all the justified charges of hypocrisy, this weeks’ battles between Church and City have, if little else, turned the spotlight on God and the question of what, if anything, the world’s main faiths, Islam, Judaism and Christianity have to say about finance, debt and spirituality.

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Under the agreement, Citigroup will absorb up to $42B of losses on a $312B pool of loans. The FDIC will absorb losses beyond that. Citigroup has granted the FDIC $12B in preferred stock and warrants to compensate the FDIC for bearing this risk. In consultation with the President, the Secretary of the Treasury on the recommendation of the Federal Reserve and FDIC determined that open bank assistance was necessary to avoid serious adverse effects on economic conditions and financial stability.

This is so typical of this nightmarish crisis we are in. Wachovia closed Friday at 10, and now it is pricing near 2. Because of the mess of what is really on these financial institutions balance sheets, no one knows what they are actually worth. Why would banks want to lend other banks when a bank like Wachovia can have this occur so quickly? How do they know that the bank they are lending to is not another Wachovia–KSH?

Update: A NY Times article is now here.

Despite all the constraints Congress supposedly wrapped around him, Treasury Secretary Henry M. Paulson is about to become the most powerful mortgage financier of the modern era — most likely of any era.

Buried beneath the 100-plus pages of detail that Paulson’s financial rescue plan has picked up during its 10-day journey from a Bush administration wish list to a bipartisan congressional compromise is the striking fact that the Treasury secretary got almost everything he sought — an eventual $700 billion and the authority to spend it largely as he sees fit.

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Update: An article from the New York Times on the same theme is here.

But we should be under no illusions that, even if it works as well as its authors hope (a large aspiration), it is already too late to avert a serious economic downturn ”” not just for the US, but for the world and, like the residents of New Orleans that fateful weekend three years ago, we seem ill-prepared for what is about to hit us.

I say this with great reluctance. It is no business of journalists (who, as someone once said, are like harlots, who wield power without responsibility) to go around scaring people. What’s more, until a few months ago I’ve been a relative optimist, convinced that we would get through this with not much worse than the kind of mild recession we’ve seen in the past 20 years. Now I think it might be time to panic.

The US is already in a recession that, even if financial conditions returned to normal today, would still be very unpleasant. In the quarter that ends tomorrow, it seems almost certain that US total output declined. Consumer spending and investment have been alarmingly weak in the past two months. On Friday we are quite likely to get another depressing report on the labour market, expected to show the ninth straight month of job declines in September. The housing market still seems to be getting worse, with sales falling faster than new construction, adding to the excess supply.

Britain’s economic activity is already declining, as is that of most of the big eurozone countries. So much for “decoupling”. We may have got into this predicament by different routes, but we’re all going the same way.

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Yet the Church of England has not collapsed – not quite, anyway. And the result of the Archbishop’s sabbatical in the United States is a splendid book on the wild, strange genius of Dostoevsky.

I was very glad to hear that he is quite unrepentant about having taken time off to write about the great Russian.

Rowan Williams says: “I think it is important that anyone in this sort of position does not become reactive, so your thoughts aren’t determined by what’s just come off the computer. And to keep that alive you need some sort of space.

“And I think it is some part of this job to try and keep stirring the cultural pot, even in a very limited way, and to say: when we are having all these debates about faith and atheism and science and so on, don’t let’s forget what lives of faith actually look like imaginatively, in ways that really serious writers and artists portray them, because if your view of religion is confined to a few fundamentalist platitudes, there’s no debate there. Yes, just to remind people that some imaginatively serious non-trivial, non-Pollyannaish writers have lived with this. Yes, it’s worth doing.”

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“Terrorism, child abuse, absent fathers and the fragmentation of the family, the secularisation and the sexualisation of culture, the future of liberal democracy, the clash of cultures and the nature of national identity – so many of the anxieties that we think of as being quintessentially features of the early 21st century are omnipresent in the work of Dostoevsky, his letter, his journalism and above all his fiction. The world we inhabit as readers of his novels is one in which the question of what human beings owe to each other is left painfully and shockingly open and there seems no obvious place to stand from which we can construct a clear moral landscape. Yet at the same time, the novels insistently and unashamedly press home the question of what else might be possible if we saw the world in another light, the light provided by faith.”

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Beleaguered Christians in India have “run out of cheeks to be struck” a senior Anglican bishop declared yesterday, on hearing reports that a Christian mob had hacked a Hindu to death in the troubled state of Orissa.

Dr Michael Nazir-Ali, the Bishop of Rochester, called for peace, and said that the murder, conducted by a knive-wielding mob of 50 Christians, could not be condoned. But he told The Times: “For months now, scores of Christians have been killed, homes, convents and presbyteries have been burnt down to the ground.”

He said: “Now one Hindu has been killed, allegedly by Christians. We do not know under what circumstances but it suggests that the worm has turned and the Christian community has run out of cheeks to be struck.”

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(ACNS) The Archbishop of York launched the “Education For All” initiative during a session of the UN’s emergency summit on Millennium Development Goals yesterday.

Speaking in New York alongside Gordon Brown and Former US President Bill Clinton, Dr. Sentamu said: “We are half way to the 2015 MDG targets and yet 75 million children remain out of school completely. Twice as many, mostly girls, go for a short while but then drop out. We may think we are making progress on education but the facts are that too many children around the world are receiving inadequate education and in many cases, no education at all….This is a scandal for many reasons. If we do not educate our children, what hope can there be for the future? But it is also a scandal because it shows just how wrong our priorities have become.”

The “Education For All” initiative is part of the Global Campaign for Education which seeks to provide free, compulsory public education, and to meet the third of the Millennium Development Goals: universal primary education.

Highlighting the urgent need for action the Archbishop said: “As citizens, and as children of God, we need to build a society where each individual can flourish and become the whole person they were created to be. Education is part of that transformative process for us to become fully human. …Education is about finding out who we are, where we belong, and what the purpose of our lives is. It is not just about acquiring knowledge and skills ”“ the root of ‘education’ is ‘educare’ which means to ‘draw out’. We need to draw out from every person in every country, the gifts and potential they possess. As Christians, as educators, as human beings, our calling is to help others to attain their full humanity ”“ not to beat them in the race but to share with them the prize.”

Dr. Sentamu also highlighted the work of the Edith Jackson Trust, one of the charities for which he is patron, and of their work to build primary schools in Southern Sudan:

“Southern Sudan has the lowest access to education than any other country in the world, with only 20% of children enrolling at primary school and less than 2% completing primary education. For girls, this figure is less than 1%. As a result 92% of southern Sudanese women and 80% of men are illiterate….Girls in southern Sudan are more likely to die in pregnancy or childbirth than complete primary education.

“Today we need to remember that we who have received the benefits of education have a responsibility to those who went before and those who come after us. That responsibility is to pass on the learning and discernment and wisdom, and to ensure all children are able to receive the benefits of that education.”

The 110 page pdf of the whole proposed bill is here.

I have not had a chance to link to this yet.

106 pages-oh my.

The Financial Times summarizes:

The US financial services sector could be forced to reimburse the US government for any losses on its $700bn rescue plan under a breakthrough agreement that paves the way for congressional approval as early as Monday.

After a weekend of frenzied talks, Hank Paulson, the Treasury secretary, and Nancy Pelosi, the Democratic House speaker, announced early on Sunday that a tentative deal had been reached authorising the government to buy up to $700bn of troubled assets from financial institutions.

The more I understand about the current financial situation, the more I’m persuaded that some form of government bailout of the financial sector really is necessary. This is not to say that I love the Bernanke-Paulson plan. If time permitted and private financing were avilable, I’d very much prefer a plan that looked more like the Chrysler bailout, in which the government acted as a guarantor rather than a principal.

What’s not acceptable, however, are the barnacles already attaching themselves to the bailout.

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I see over on Intrade that the chances of the bailout bill passing have sunk below 50 and are currently at 48.9.

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A breakthrough came when Democrats agreed to incorporate a GOP demand ”” letting the government insure some bad home loans rather than buy them ”” designed to limit the amount of federal money used in the rescue.

Another important bargain, vital to attracting support from centrist Democrats and Republicans who are fiscal hawks, would require that the government, after five years, submit a plan to Congress on how to recoup any losses.

Lawmakers could block half the money and force the president to jump through some hoops before using it all. The government could get at $250 billion immediately, $100 billion more if the president certified it was necessary, and the last $350 billion with a separate certification ”” and subject to a congressional resolution of disapproval.

Still, the resolution could be vetoed by the president, meaning it would take extra-large congressional majorities to stop it.

The presidential nominees came behind the outlines of the bailout.

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Hedge funds pointed to the willingness of the Church commissioners to lend foreign stock from their £5.5bn ($10.2bn) of investments ”“ an essential support for short selling ”“ and derided the pair for not understanding shorting.

“They are trying to shoot the messenger and … deflecting attention away from the dramatic incompetence of bank executives,” said Hugh Hendry of Eclectica Asset Management, a London hedge fund. “Short selling is the pursuit of truth.”

Andreas Whittam-Smith, who as First Church Estates Commissioner oversees the Church’s assets, said the commisioners yesterday referred the practice of stock lending back to their ethical advisory group, which had previously approved it.

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