Following the rejection of the $700 billion bailout propsal, lets look at what it could have done. The bill was designed to get financial institutions lending again by letting the federal government purchase their troubled assets.

Seven hundred billion dollars is a lot of money but it would have been released in stages, and the cost is not expected to be near the amount the treasury invested mainly because the government is buying assets that have underlying value.

Also included in the proposal was a plan created to protect taxpayers from taking too much of the weight, as well as an oversight board who would be in charge of monitoring the spending and outcome of the proposal. The plan would also help troubled homeowners receive loan modifications.

Although there was a lot of money going in to this bailout, there is even more at stake. Our financial system supports our entire economy, so although it may seem as though we are just bailing out Wall Street, we are actually bailing out the entire country and the world.

The decision on the $700 billion bail out maybe near as law makers worked through the night to workout the details of the proposal. The original proposal made made Treasury Secretary Henry Paulson did not make it far with law makes as they were afraid the bailout would only help indviduals and businesses on Wall Street.

Democratic Senator Chris Dodd who is also the Senate Banking Commitee Chairman the Chairman, said he wants to be sure there are provisions to ensure that tax payers aren’t going to be hit hard. In addition the senate democrats have also proposed a plan that would require the federal government to create “a systematic approach for preventing foreclosures and ensuring long-term, sustainable home ownership through loan modifications and the use of the HOPE for homeowners program.”

Today President Bush, John McCain, and Barack Obama will meet to discuss what should be done with the financial crisis, in hopes of giving the candidates insight on what this could mean for either canidates presidential plans following the election.

Everyone needs someone to blame, including Wall Street. In this case the blame seems to be coming down to one sector; housing. The take over of Freddie Mac and Fannie Mae, Lehman Brothers filing for Bankruptcy, and Merrill Lynch selling themselves to Bank of America; all comes back to the deteriorating housing market.

As experts have suggested, the housing market has not hit bottom. Subsequently there will be more trouble on Wall Street.

Secretary Henry Paulson announced in a briefing today that although our financial system is going through rough times, Americans can remain confident as our financial system is sound and resilient. This comes after the largest federal takeover in history and as domestic and foreign markets continue to plummet.

Paulson claimed that the housing correction is at the root of the market turmoil, and that the takeover of Fannie and Freddie is an important turning point for the current market. He continued by saying that we need to find a balance between regulation and market discipline.

The August foreclosure numbers are in and they are not pretty. They are the highest numbers seen since the beginning of the housing crisis; 304,000 homes were in default , and 91,000 famillies lost thier homes all in one months time.

This is a 12 percent growth from July and a 27 percent growth from August 2007. One of the hardest hit states was California who has eight of the top ten metro areas with the highest foreclosure rates, with Stockton, California coming in on the top of that list.

As the experts have said, we have not hit bottom.

Two of the largest financial institutions in the United States have been rescued by the federal government. Both Freddie Mac and Fannie Mae were taken over on Sunday by an order through the Bush Administration, which placed the two companies in a conservatorship, they replaced their CEO’s and directors, and have made plans to put billions of dollars into the company in order to keep them afloat.

There are several positive outcomes which can come from the take over. First, the market may calm offering a little stability, and as a result help the U.S. Economy. It will also allow more opportunities for loan modifications to homeowners who have fallen behind on their payments. The interest rates are also expected to decrease slightly, which will hopefully encourage buyers to purchase homes.

With any luck this takeover will offer some cushion to the falling housing market. As Freddie and Fannie together owned or guaranteed more than $5 trillion in mortgages. This is almost half of all mortgages in the country.